Archive for April, 2012

Student Loan repayment threshold

Those of you who are repaying your Student Loan through PAYE might have noticed that this month your student loan deduction is a little lower than usual (£5-£6 lower). This is because the annual threshold for student loan repayments increased in April from £15,000 to £15,795.

Income-contingent Student Loans are repaid from the April after you complete your course, at a rate of 9% on any gross income above this threshold. This is similar to the way income tax is calculated – i.e. a percentage of any income above a certain “free” allowance. However, while the tax-free allowance usually increases by a small amount each year, the student loan repayment threshold has been steady at £15,000 since April 2005 – before that, it was £10,000. If you’ve been paying off your student loan for a few years now, you may be surprised to see this change. More information is available from the Student Loan Repayment site. The Salary Calculator is up-to-date with this change to the repayment threshold.

If you are repaying your student loan and you think you might be close to paying it off, this earlier blog post about Student Loan over-repayment may be of interest to you.

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Monday, April 23rd, 2012 Student Loan No Comments

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Pro-rata Salary Calculator added

For a very long time, people have been asking me to add a pro-rata tax calculator to The Salary Calculator – I have finally created it and added it to the site. As I have mentioned in an earlier post, pro-rata salary is normally calculated quite easily. For reduced hours, most employers will multiply the full-time salary by the reduced number of hours divided by the full-time hours.

For example, if the full-time salary is £20,000 per year for 37.5 hours’ work per week, the pro-rata salary based on a 18-hour working week would be:

£20,000 x (18 / 37.5) = £9,600

Income tax, National Insurance and other deductions are then calculated based on this new salary. To use this new tool, you just need to enter the full-time salary, the full-time hours, and the new hours that the pro-rata salary is to be calculated from. To check it out for yourself, get started with the pro rata Salary Calculator.

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