If you’re a cash-strapped student paying taxes probably feels like insult following injury. The good news is that you might be able to reduce your tax bill, get a tax refund or pay no tax at all! Read the MoneyMagpie guide to student tax and see if you could start saving money!
- Income tax for students
- National Insurance for students
- How students can claim a tax refund
- Council tax and students
- Benefits for students
If you only work during the holidays you’re in luck – you might not have to pay tax at all.
To get paid tax-free you must:
- Be a student who is planning to carry on being a student until after April 5 next.
- Not have a total income from all sources in the tax year of more than £11,850. Student loans, scholarships and educational grants are exempt from this figure.
Find out more information at this page on Gov.uk about how employers must pay you.
Term time work
Sadly, if you work during term time as well as over the holidays, the same rules apply to you as to non-students. The good news is that if you earn below a certain amount you won’t have to pay tax – make sure you aren’t if you don’t have to. Everyone has a personal allowance of £11,850 per year – this means that you can earn up to £11,850 tax free each year. The lowest tax band kicks in after this, so if you earn more than the personal allowance amount you’ll be paying 20% tax on your income.
You pay National Insurance (NICs) contributions to build up your entitlement to benefits like the State Pension. Like tax payments, the amount of National Insurance you pay depends on how much you earn. Most students don’t pay NICs because their earning are too small, but if you earn over £162 (2018/19) a week you’ll pay NICs at 12%. Unfortunately, you can’t claim it back if you overpay in the same way you can with income tax.
The Gov.uk website has a section on National Insurance contributions which you can check if you’re still unsure whether you have to pay.
If you’ve paid too much tax you really should claim it back! If money’s tight, as it usually is on a student budget, you absolutely should be claiming what’s yours. A tax refund could turn out to be a nice little windfall so it’s really worth getting on to the tax office and getting your money back.
In theory you shouldn’t have paid too much tax as your employer should make sure they’ve told the tax office the right rate you should be paying at. Mistakes can be made however. The most common circumstances for overpaying tax are:
- You started a new job and were given an emergency tax code for a while
- Your employer gave you the wrong tax code
- You were only employed for part of the year
the tax checker tool
HM Revenue and Customs have a handy tax checker you can use to see how much of a refund you could get.
The way you claim back the extra tax depends on your circumstances:
- If you were working during the holidays but have returned to studying you should fill out a P50 form if you will not have any further earnings during the tax year. See more here
- If you’ve overpaid through wage deductions, which is more likely if you work during term rather than just in the holidays, you need to write to your tax office explaining that you think you’ve paid too much tax. You will also need to complete and print the form here and send this with details of your earnings .
- If they don’t have the right information to check out your claim they’ll write to say what documents you need to send to them. Find the details for your local tax office here.
Mike Parkes from tax experts Go Simple says “It’s important that if students do not have a P45 from a previous job, they complete a form P46 accurately. This will help ensure they do not overpay tax and have to go through the process of reclaiming any overpaid tax.”
Full-time students are exempt from paying council tax. Part-time students are not, though you can claim relief if your income is low enough. The situation can also get trickier if you live with a non-student – usually if you’re living with a non-student you’ll qualify for a council tax discount. To qualify for an exemption or discount you should contact your local council: find their details here.
Students aren’t generally entitled to social security benefits, either in term time or holidays. There are a few exceptions. If you fall under any of the following categories you should check with your university, student union or the Department for Work and Pensions in case you’re entitled to extra cash:
- Single parents
- Student couples with children
- Disabled students
- Couples where one partner isn’t a full-time student
- Part-time students on a low income
For more information about student finance check out our article on student grants and loans and bursaries, scholarships and sponsorship you could get.
Our thanks to Mike Parkes from Simple Tax for helping update this article.