Agreed, tax changes mean its hard to make decent profit
Tax - Wheres the incentive to earn more
- Thread starter ProStreet
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This resonates a bit with my experience, my school was all about getting kids to uni, everything was focussed around that. They didn't really present any options for doing something different. One reasonably good student took a different path and went into accountancy at 18, the school tried to talk him out of it but when we came out of uni he'd taken that 3 year head start and was well ahead. I remember coming back to live with my dad after uni, taking a rubbish job I could have done at 16/18 and scratching my head a bit as to why I was so far behind.
My degree was basically a 'waste' of three years, I've used less than 3% of what I learned since, I didn't really get a job 'expecting' a degree until my 30s by which point I'd gained enough experience to get it anyway, but I also had the +1% ceiling on interest rate so it wasn't that expensive by modern standards.
My wife went down the non-Uni route and got a job with fully funded training in a professional sector. She’s now years ahead in her career, has all the professional qualifications and has no debt.
When she left school she was the highest achieving person in the school ever had. The school literally told her she was ‘wrong’ and she would ‘regret’ not going to Uni…
But like I said for many people it is the right decision, it just isn’t the only option people should consider. For example some people really need the time away from home to get an actual grounding in real life.
When she left school she was the highest achieving person in the school ever had. The school literally told her she was ‘wrong’ and she would ‘regret’ not going to Uni…
But like I said for many people it is the right decision, it just isn’t the only option people should consider. For example some people really need the time away from home to get an actual grounding in real life.
A bit like Richard Branson huh? Confirmation bias is strong with this one.
Uni is great to get yourself into a graduate scheme, or enrich your life with higher-level learning with a view to specialise in that subject area or go beyond (doctorate).
If you have none of the aims above in mind, it probably isn't for you - unless you really want to experience Uni life.
How is that confirmation bias? I have shared both mine and my wife’s experiences with no view on which was better. All I’ve said is that it should be a more considered decision and there are other opportunities available which schools don’t push or actively lobby against them as was the case for my wife.
I even said going to Uni is the right decision for lots of people, including me having benefited directly from the education I received there.
Very true. It's what you do with the cash once you've maxed out each year is the challenge.
The incentive is that you take more money home, simple as that.I'm a graduate on the plan 2 student loan, im about 5 years into employment and earning a 'high' salary relative to most (c£70k). However any additional income I now earn is taxed at >50% despite only being in the 40% tax bracket. This is due to the student loan which is effectively an additional tax.
Even though I pay around £4k pa. on my student loan, due to the interest rate of RPI plus 3%, I'm not paying anything against the capital, only interest.
For example, I got my bonus of £6900 this month and my take home from that bonus was £3400.
Where is the incentive to earn more? Why is the government charging ludicrous rates of interest. Only the extremely high earners can afford to pay it off early, whereas the lower income don't pay anything at all, and like most of the time, the middle income earners pay the most of it.
I understand if people feel like I'm being selfish when im on a decent income, it just feels so demotivating to try to work harder when you get less than half of it in return.
Anyhow
Your education has got you to a point where you can earn lots, now it's time to pay it back
I'm fortunate enough to be in the additional rate bracket, but I don't for a moment think I pay too much tax. I feel I have a responsibility to pay back for all the support and education I've got from taxes to get to this point.
Neither route is easy nor a given. These days graduates struggle to get entry-level jobs, how would someone with GCSEs compete? Even apprenticeships weren’t easy to get when I looked at them, nor were trainee electrician/trade jobs. That was a while ago, mind.
Is the OP saying they will refuse a payrise? No incentive?
Given the interest rate of RPI+3% it is a bit of a predicament though. If you pay it off quickly you avoid a lot of interest, but if you do that by sacrificing a lot of your living standard today then you are gambling.
It is a bizarre situation that someone earning 70k is only paying interest currently. Although it is worth noting that if the principal amount isn't increasing, it will get eroded by inflation over time and your salary will increase (even if it's just with inflation).
Given the interest rate of RPI+3% it is a bit of a predicament though. If you pay it off quickly you avoid a lot of interest, but if you do that by sacrificing a lot of your living standard today then you are gambling.
It is a bizarre situation that someone earning 70k is only paying interest currently. Although it is worth noting that if the principal amount isn't increasing, it will get eroded by inflation over time and your salary will increase (even if it's just with inflation).
The person with GCSEs gets a 5 year head start, so even if it takes them a while to land a job, and then 3 years to skill up, they could still come out ahead. As you say, the graduates struggle to get entry level jobs, so it's not like all of them get to 'jump the queue' and walk into an elite job at 21. I certainly didn't, would have been ahead for sure going in with GCSEs or A-levels.
Tbh, the main benefit of my degree was it allowed me to study a Masters via the OU later on when I was older, that avenue wouldn't have been open to me to be fair.
Problems of the 6 figure owners?
Regardless of the costs, take home pay of that amount after child care is paid for is what many would dream for.
System would be broken if the higher paid didnt have to pay more than the lower paid.
On the loan thing lets put into perspective.
There is a business for sale, you borrow the money to buy it, you may even borrow at horrid interest rates, but you do what you need to do to get the deal done, the business as it turns out makes lovely profits and effectively pays off the loan for you whilst leaving some in your pocket as well.
In short I would rather be in debt and get a better higher paying career vs skipping it all and been on a low paid manual job all my life.
Quite. To say there is no incentive to work past £112k is just utter nonsense!Its a rather bizarre outlook i must say
It has a bit of sense to it...
Beyond £100k, once you hit the tapering allowance, you are encouraged to dump into the pension. If you hit this earlier enough, you'll max your LTA. Then beyond £100k you get taxed so heavily you could argue the incentive is to not go much further.
Especially in pretty well defined high-salary roles like public sector etc. where the "next salary band" is well defined in terms of responsibilities.
In those sort of public sector roles you are better off undertaking the role for a few years and then moving to the private sector where your remuneration options are substantially more flexible at that level.
I guess if you know you definitely want to be an accountant (and your only options are former polys and mid-tier universities) then you perhaps wouldn't. If you don't know what you want to do then perhaps studying a STEM subject might still be useful, or if you get into Oxbridge/London/Warwick or a few other top universities then studying anything could still add value.
What I find really baffling is the presence of accounting degrees, when you qualify for an accounting degree (or most of one, as you've mentioned - just submit a dissertation) by virtue of qualifying as an accountant anyway! Like you might get some exam exemptions from studying a relevant degree, the other way around seems better - you get exemptions from all taught modules by studying the professional qualification itself! In fact, it not only qualifies you for a BSc but an MSc too (pending the dissertation).
Seems like there is no point at all in attending a mid-tier university to study accountancy at all, when an accountancy firm will pay you to study exactly the same, via the actual professional; bodies and a mid-tier university will then award you a degree in accountancy for your trouble anyway.
I dunno - I presume @Dr House is referring to part-time work as a contractor vs full-time - else I'm not sure why there is a big salary difference?
I guess in his particular scenario, given the tax situation for contractors + the personal allowance at 100k + the loss of childcare benefits it might work out that a part-time contracting gig gives him the same net situation.
If that isn't the case and he'd simply be earning more money by being full time, albeit getting whacked with lots of tax, then there is still a disincentive there but it doesn't necessarily eliminate the (potential) benefits of earning 165k as he could dump more of that into his pension for the duration of the time he needs the childcare (this would also avoid the harsh tapering off of the personal allowance too).
Soldato
I think you all miss the point somewhat though. It hits a point where there is very little point to progress past that point, as it comes with so much more stress, time at work, and a complete **** when it comes to work life balance.
Work hard. Take risks. Make it your aim and do it then.
The latter doesn't determine the term though. Just because you start on a lower paid job doesn't mean that's where you'll end up. Nor does uni / a degree mean you WILL earn more and guarantee that
I think it's very industry dependant.
The average earnings in my team this year (IT Sales) is around £250k. We're in a company that actively encourages a strong balance and it's not insane levels of stress. I appreciate that's a very fortunate position, though and to progress past £100k in other industries may bring with it unwanted side effects, like you say.
One thing I have recently realised is that there is generally little value in being the 'referred to expert'. What is ideal is a managerial, legal or essential HR based role at a successful business worth £££££. Then, you're really flying.