If you work and you are a student you are liable to pay income tax and National Insurance contributions on your earnings.
Understanding about tax will help you to manage your finances for life. Here’s what you need to know:
Update from Police Scotland: "Students starting university this year are being warned by HM Revenue and Customs (HMRC) that they could be targeted by a fresh wave of tax scams. As new students start the academic year, they can be particularly vulnerable to cybercrime. If someone calls, emails or texts claiming to be from HMRC, saying that you can claim financial help, are due a tax refund or owe tax, and asks for bank details, it might be a scam. Check GOV.UK for how to recognise genuine HMRC contact."
When you need to pay tax
Whether you work during the term-time or just in the holidays you will normally have tax and National Insurance contributions deducted from your earnings. However, everybody can earn a certain amount tax-free in each tax year. This is known as your Personal Allowance. Each tax year begins on 6 April and ends the following 5 April.
Know your Personal Allowance
Your Personal Allowance changes every year, to see the current allowance click here. This is the amount of money you can earn before you start paying tax. All income over this amount is taxable. The allowance is spread across the year, and apportioned on a weekly or monthly basis, depending on how often you are paid. So you normally start paying tax when you start earning.
How to get a Tax Refund
If over the tax year you earn less than your Personal Allowance and have paid some tax, you can claim a refund. There may also be other occasions when you could be entitled to money back. Click here to use the tax checker to work out if you are entitled to a refund, and to find out what to do next.
Look after the forms your employer gives you
Forms and payslips that your employer gives you are important if you find you need to claim a tax refund, especially a form called P45 (see below for a sample) and another called P60 (see below for a sample)
A P45 should be given to you whenever you leave a job. Keep this safe and give it to your next employer, remembering to keep the top copy for your records.
The P60 summarises the amount you have earned over the tax year as well as the amount of tax and National Insurance contributions that have been taken off your wages.
What if I have more than one job?
No matter how many jobs you have, you are only entitled to one Personal Allowance in any tax year. If you start another job without giving up your first job you won’t have a P45 to give to your employer. Instead you will have to fill out a P46 form.
About your tax code
The tax code is used by your employer to work out how much tax to deduct. You may find a box called ‘Tax Code’ on your payslip, P45 or P60. Click here to find out more information about tax codes.
Notify HMRC if you change your address
Make sure you update your HMRC tax office if you change address. It’s not your employer’s responsibility to tell them for you. (See the website below to help find your tax office).
Despite the restrictions on levels of working hours international students must follow exactly the same procedures as outlined above. See link below
Similarly if a foreign student is leaving the UK for good and they have paid tax on their earnings they should obtain and complete a form P85 (you can download this form below) which will enable any relevant tax refund to be made.
Don’t be confused by tax. Visit https://www.gov.uk/student-jobs-paying-tax for the facts.