https://file.aiquickdraw.com/mathbot/file/1727421742669g2nm96fa.jpg

We need to analyze Stefan's claim and determine whether his net pay will indeed decrease by more than £500 per month when transitioning from his bursary to a teaching job.

### Step-by-Step Calculation:

1. **Annual Salary after Tax-Free Allowance:**
   Stefan’s gross salary is £22,023, and his personal tax allowance is £12,500. This means he will only pay tax on the amount exceeding £12,500:

   \[
   \text{Taxable Income} = £22,023 - £12,500 = £9,523
   \]

2. **Income Tax Calculation:**
   Assuming the basic rate of income tax is 20%, the income tax on his taxable income would be:

   \[
   \text{Income Tax} = 20\% \times 9,523 = 0.2 \times 9,523 = £1,904.60
   \]

3. **National Insurance Contributions (NIC):**
   The NIC rate typically applies to earnings over a certain threshold, for example, £12,570 annually. For simplicity, we'll assume he will pay 12% on income above £12,570 (rounded based on 2023-2024 thresholds).

   His NIC contributions will be:

   \[
   \text{NIC Payable} = 12\% \times (22,023 - 12,570) = 0.12 \times 9,453 = £1,134.36
   \]

4. **Total Deductions:**
   The total amount Stefan will have deducted (Income Tax + National Insurance):

   \[
   \text{Total Deductions} = 1,904.60 + 1,134.36 = £3,038.96
   \]

5. **Net Pay Calculation:**
   Stefan’s net annual pay after deductions is:

   \[
   \text{Net Pay} = £22,023 - £3,038.96 = £18,984.04
   \]

6. **Monthly Net Pay:**
   Dividing his net annual pay by 12 gives his monthly net pay:

   \[
   \text{Monthly Net Pay} = \frac{18,984.04}{12} = £1,582.00
   \]

### Comparison with Bursary:

- **Current Bursary:** He receives £25,000 per year, so his monthly bursary is:

  \[
  \text{Monthly Bursary} = \frac{25,000}{12} = £2,083.33
  \]

- **Difference in Monthly Pay:** 

  \[
  \text{Difference} = £2,083.33 - £1,582.00 = £501.33
  \]

### Conclusion:

Stefan's net pay will decrease by **£501.33** per month, which is indeed more than £500 per month. Therefore, **Stefan is correct** in his statement.

---

Do you want more details or further clarification?

Here are 5 related questions:
1. How is the personal tax allowance applied to taxable income?
2. What are the standard income tax rates in the UK?
3. How is National Insurance calculated based on annual income?
4. What are other common deductions from salary in the UK?
5. How do tax allowances change with different income levels?

**Tip:** Always check for the latest tax bands and NIC rates, as these can change each tax year.

Stefan is training to be a teacher. He has no student loan as he has a bursary of £25,000 for one year. As it is a bursary, he does not pay tax or National Insurance or have any other deductions. He will start his first teaching job in April and his annual salary before income tax and National Insurance will be £22,023. He has a personal tax allowance of £12,500. He says, 'My net pay will decrease by more than £500 per month.' Is he correct? You must show your working.

Solve this real-world problem of Stefan’s pay transition from a bursary to a teaching job. Learn how to calculate net pay with income tax, personal allowance, and National Insurance contributions. Suitable for high school students.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation