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Old 17th December 2012 | 12:27
  #43 (permalink)  
chocolateracer
 
Joined: Oct 2012
Posts: 65
Likes: 0
From: Manchester
Stocious,

You're right there. Due to only paying income tax on the published GROSS salary from the FFP payscale chart. The £1000 per month is worked out similar to a mortgage repayment plan. Over the 7 years the £1000 per month is made up of an INTEREST and an CAPITAL REPAYMENT amount. Both totalling £1000.

In month one the ratio goes something like this:-

Interest payment -> £506.00
Captial repayment -> £494.00

In month 84 it's like this:-

Interest payment -> £15.00
Captial repayment -> £985.00

You pay no tax on the capital repayment portion (as it's your money coming back to you). However, you don't pay the full income tax on the interest payment only a "withholding tax" of 20%.

So as you rightly say although your gross is less the net figure is slightly higher.
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