Market Loop - 💸April pay squeeze looms for graduates

PERSONAL FINANCE
April pay squeeze looms for graduates

What’s going on?
Yesterday the government confirmed National Insurance would rise following reports that it could be shelved. The news came days after the government announced the repayment threshold on student loans in England would freeze this year which a leading thinktank called a “tax rise by stealth”.

Why is this important?

If you’re a working graduate still repaying an outstanding student loan balance, then your April payslip will be trimmer than the March one.

A 1.25% National Insurance increase for workers and employers was announced last September. The government said it would raise £36bn over three years to clear the NHS waiting list backlog that had ballooned during the pandemic and fund social care for the elderly.

In recent weeks the tax hike faced growing opposition with critics arguing it will hit hardest the youngest and poorest and comes at a time when inflation is adding further pressure to household income.

But the Prime Minister and the Chancellor announced they would go ahead as planned. So from April this will mean extra an £255 a year in tax for someone earning £30,000 and £505 for those on £50,000.

Student loans are also getting a shake up from April. English students who started university since 2012 repay 9% of everything they earn above £27,295 once they graduate. It generally rises with inflation to ensure that pay rises aren’t swallowed up by student loan payments.

But the government announced that the threshold is freezing. If the current rate of inflation had been used it would have risen above £28,000. It means that a graduate on £30,000 will pay an extra £113 in student loan repayments a year. 

It’s estimated that the move could save the government about £600m a year.
 

TECH
‘British Bill Gates’ faces US extradition

Back in 2011 Mike Lynch was the toast of the UK tech scene after he sold Autonomy, the software business he founded, to US tech giant Hewlett Packard for $11bn. It’s thought he personally made $800m from the deal and was hailed as Britain’s answer to Bill Gates.

But things went south very quickly as HP soon accused Lynch of fraud by deliberately overstating the value of Autonomy and the two parties have been locked in a bitter legal battle ever since.

Last week the Home Secretary announced that Lynch can be extradited to the US to face 14 counts of fraud charges which if found guilty could result in a 20-year prison term.

Lynch has always denied the allegations and said he was being made a "scapegoat" for mismanagement by HP. He says he will appeal against the extradition decision — a process that could take one year.