Student Tax & National Insurance
If you're a student and plan to get yourself a job to earn some extra cash, you'll have to pay:
- Income Tax if you earn more than £1,042 a month (this is known as your personal allowance).
- National Insurance (NI) if you earn more than £166 a week.
Both of these will normally be deducted through your wages by PAYE (Pay As You Earn).
If you don't earn over these amount, you won't have to pay any income tax or NI.
What if I only work during the holidays?
Since April 2013 it makes no difference for tax purposes if you are a student only working in the holidays.
Employers must treat students in the same way that they treat other employees.
I think I’ve paid too much tax – what do I do?
If you think you've overpaid your income tax, use the student tax checker to find out if you could be owed a refund.
What if I'm self-employed?
If you work for yourself, you won't have an employer to take care of tax and National Insurance for you.
If this is the case, you'll need to fill in a Self Assessment tax return each tax year, on which you declare your income and expenses.
This allows HM Revenue & Customs (HMRC) to work out how much tax you need to pay.
You should tell HMRC as soon as you start working for yourself (you cannot register in advance). To register, call the 'Newly Self-Employed Helpline' - you can find details for this at gov.uk..
You may have to register as a sole trader if certain conditions apply to your self-employment situation.
Tax forms when you leave a job
If you leave a PAYE job, your employer will give you a Form P45.
Make sure you keep this safe as you will need to give it to your next employer – this is so you don't pay too much tax in the future.
Working overseas in the holidays
If you normally live and study in the UK but work abroad during the holidays you’ll need to pay:
- UK tax on anything you earn above your Personal Allowance
- National Insurance if you work for a UK employer.
If you work for a foreign employer you don’t need to pay National Insurance in the UK, but you might have to pay contributions in the country you’re working in.
What about foreign students working in the UK?
If you work in the UK while studying, you'll normally pay UK tax and National Insurance, as described above.
However, you may be entitled to reclaim tax you've paid when you leave by filling in a P85 form and sending it to the Tax Office - your employer will have the details for this.