Big 4 Loans

#1

Hi guys,

I’ve heard a bit about the Big 4 offering an interest free loan to newly recruited graduates, and was wondering if anyone could shed a little light on the issue.

Specifically, I was wondering if the loan becomes available once you accept an offer with a firm, or whether you need to wait until formally starting work. I’m most interested in joining PwC, so any information with regards to this firm’s policy would be especially appreciated.

I’m trying to figure out a plan for after I’ve (hopefully!!) secured myself a position, obviously the loan money could prove useful for potentially traveling etc.

#2

Don’t quote me on this, but I heard the loan with PwC is available a month or two before you start, around £5,000 repaid over a few years.

#3

I took out the maximum loan over the longest period of time - since they give you a choice of amount and repayment period it seems bizarre to do otherwise (I am going to be an accountant after all!). Be aware that over £5,000 the loan is considered a taxable benefit and therefore you will pay your marginal rate of income tax at the interest rate HMRC have prescribed. It’s still worth it as the interest rate you earn on the principal is greater than the 20% of the taxable benefit your receive.

Anyway, I received my loan a couple of months before I began work and was given a choice of the amount and the repayment period. So I get about 200 quid taken off my monthly salary until I’ve repaid the full amount.

#4

I don’t really understand the whole taxable benefit issue when you borrow over 5000 pounds. Can anyone explain?

#5

Generally if the loan is below 5000 you won’t get taxed however if its above 5000 pounds the then the amount you get taxed is as follows:

loan taken out x 6.25%(i thinks its 6.25- chek this out just in case),

note that the above is the general rule if the loan exists throughout the tax year then for the “loan taken out” part will change i think its (loan @ start of year plus loan @ end of year) divided by 2.
Hope this helps

#6

…and you’ll only be taxed until the balance owed is less than £5000, after that you don’t incur tax.