This week, the Government was accused of “quietly tightening the financial screws” on students and graduates, after the Chancellor announced a freeze on the threshold – meaning many will pay tax on an extra £1,255 this year
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Martin Lewis questions Rishi Sunak on student loans
The student loan repayments threshold is being frozen from April affecting millions of people who recently graduated – and it means many earners will now pay more tax.
The changes affect people on plan two loans – these are those who started university in or after 2012 in England and Wales and who currently work and repay their loans.
Under the current threshold, you pay 9% of everything you earn above £27,295 a year.
“We were set to see in April that this would rise by average earnings by 4.6% which means you would pay 9% of everything you earn above £28,550, but the government has frozen what you pay at the current threshold at £27,295,” Martin Lewis said on Thursday’s ITV Money Show.
“This is a bit like tax,” he explained.
“The higher you pay, the better for you. The freeze means you will now pay 9% on an extra £1,255 that you would not have otherwise paid if the threshold had changed.
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Image:
AFP via Getty Images)
“Everyone that repays plan two student loans will now repay £113 more this year to the government.”
But it gets…
