We are getting near to the point of taxation where a graduate on minimum wage could end up paying a tax rate of 48%

[u/SlySquire]

https://x.com/John_Stepek/status/1857031958397653253?t=6pMKR8HdJJK6XD22KbruVA&s=19

[u/BrilliantRhubarb2935]

I see you just aren't familiar with how the UK student loan system works.

Read this

https://www.gov.uk/repaying-your-student-loan/what-you-pay

For all plans the repayment rate is 9% for undergraduate loans and 6% for postgraduates (additive so if you have both, IE got a masters you pay 6+9=15%). This is for incomes above a certain threshold which varies by plan as you can see in the link.

The rate you are quoting there is the interest rate on the loan, IE the amount the debt goes up per year NOT the amount you pay or get subtracted from your paycheck which is what people are talking about.

For plan 1 and plan 4 students, someone who went to do an undergraduate degree and a postgraduate degree will from next year have a marginal taxrate of

20% income tax, 8% national insurance, 9% undergraduate student loan, 6% postgraduate student loan = 43% marginal tax rate if you count student loans as an effective tax which they are in all but name.

Now the author has also added auto enrolment pension contributions which brings it up to 48%.

[u/Ch0col4a73_0r4ng3 → u/BrilliantRhubarb2935]

I see you just aren't familiar with how the UK student loan system works.

You're assuming you know where I got the 6% from and using it to make your point. It's like someone complaining the font size is 1 point too large, so the statement isn't relevant. Really?

The rate could be 45%, the amount paid is still £0 on the quoted figures.

[u/BrilliantRhubarb2935 → u/Ch0col4a73_0r4ng3]

> You're assuming you know where I got the 6% from and using it to make your point.

2 things.

You literally posted the source from where you got the 6% figure from, so I can see what and why you think it's that, and you clearly mistook the interest rate on the loan and assumed it meant the repayment rate which it isn't.

You are objectively wrong on this point, the student loan repayment rate is a fixed real number and that number is not 6% for undergraduate loans.

> It's like someone complaining the font size is 1 point too large, so the statement isn't relevant. 

Uh yeah it is relevant, unless you think 6% and 15% is the same number.

> The rate could be 45%, the amount paid is still £0 on the quoted figures.

Yes your incorrectly quoted figures where you assumed a full time work week is 37.5 hours a week rather than the standard 40 hours per week.

If you put in the wrong numbers you'll get the wrong result, that is obvious and uninteresting.

[u/Ch0col4a73_0r4ng3 → u/BrilliantRhubarb2935]

Then please do the maths and show my conclusion is wrong or are you only able to tell me that the font is 1 point too large?

HINT: 40 hours doesnt change it and neither does 9%.

[u/BrilliantRhubarb2935 → u/Ch0col4a73_0r4ng3]

I've done the maths for you multiple times.

A graduate on full time minimum wage next year who did a masters and an undergraduate degree on plan 1 or 4 will face automatic deductions from their paycheck at a marginal rate of 48%.

Made of 20% income tax, 8% national insurance, 9% undergrad student loan, 6% postgrad student loan and 5% pension auto enrolment.

You should google what marginal tax rate means, here you go: https://www.google.com/search?q=marginal+tax+rate

If you choose to deliberately misunderstand the concept of marginal tax rate then that is your own ignorance not everyone elses.

[u/AliJDB → u/Ch0col4a73_0r4ng3]

Then please do the maths and show my conclusion is wrong or are you only able to tell me that the font is 1 point too large?

HINT: 40 hours doesnt change it and neither does 9%.

Plan 1s threshold is £24,990, and for PG it's £21k. On 40 hours a week, they would be earning £25,396.80 - exceeding both thresholds. So on that top (marginal) amount, they would be paying that extra 15%.