Every penny is vital, and so it’s important that you don’t pay any unnecessary tax or National Insurance. Our guide explains how to deal with your tax affairs as a student.
Do you have to pay tax and National Insurance as a student?
If you work for an employer during term-time, you will pay any Income Tax and National Insurance (NI) due on a Pay as You Earn (PAYE) basis. This means that tax and NI will be deducted from your wages before you receive them.
However, everyone is entitled to earn a certain amount each year without paying any tax. This is called the ‘personal allowance’ and is £6,475 in the tax year 2010-11. You also only pay National Insurance contributions if you earn over a certain amount per week (£110 in tax year 2010-11).
If you earn under this amount, you should not have to pay any tax or National Insurance.
Special rules if you are a student and you only work in the holidays
If you are a full-time student with a holiday job, you may not need to pay tax through PAYE. However, you will still pay National Insurance contributions if you earn more than the weekly threshold.
There is a form called a P38(S) that you can download or request from your employer if all of the following criteria apply to you:
- You are a full-time student in the UK
- You are only working in the holidays
- You are returning to full-time education at the end of the holiday
- Your total income for the year is under the personal allowance limit
If you have a part-time job during term time, you can’t use form P38(S) just for your holiday job.
Working abroad in the holidays
If you normally live and study in the UK but you work abroad during the holidays, you will still count as a UK resident for tax purposes. You will have to pay UK tax on anything you earn abroad above the personal allowance.
However if you are taxed by your overseas employer, and you can’t claim the tax back directly from the foreign authority, you will probably be able to claim a tax credit in the UK.
If this applies to you, you should contact your tax office for more advice.
Tax rebate for students
If you believe you have paid too much tax, you should get in touch with your tax office. You may have to provide documentation such as P45s or P60s confirming your earnings in order to obtain a tax refund.
You will typically either receive a new tax code to take into account any rebate that is due.