Hi, I have been working as an IT contractor through umbrella company for a while and I want to start Masters degree next year. I just wanted to confirm the way the expenses and taxes will be calculated with the salary (just to confirm my understanding is ok) to make sure that putting that as "business expense" will be more beneficial than getting individual tax relief.
For simplicity sake lets assume I make 100k a year with effective personal tax rate of 40% and there are no other expenses. The masters costs 5k/year.
As for PAYE relief I would have got 20% of 3500 (first 1500 is excluded apparently for PT courses), so 700 euro back, out of 40k paid in tax. So around 39k paid in tax.
Now, I think the way the tax will be calculated if that goes as business expense is below but im not 100% sure.
gross salary minus master cost: 100k - 5k = 95k taxable salary
personal taxes: 95k*0.4=38k
So am I right in saying that the business expense option will leave me 1300euro more in disposable income? Or am I calculating that incorrectly?
Thanks in advance for any help.