Tax and National Insurance
Students are liable to pay Income Tax and National Insurance contributions in the same way as everybody else.
If you work for an employer during term-time, any Income Tax and National Insurance due will be deducted from your wages before you receive them. This is known as Pay As You Earn (PAYE). Everybody can earn a certain amount before they start paying Income Tax - this is known as your Personal Allowance (£11,850 for the tax year 2018/19).
Income Tax is charged at three different rates. For the tax year beginning 2018/19 these rates are:
- Basic rate: 20% for taxable income of £11,851 to £46,350
- Higher rate: 40% for taxable income above £46,351-£150,000
- Additional rate: 45% for taxable income over £150,000
For the tax year 2018/19, you begin making National Insurance contributions when you earn above £162.01 a week (the earnings threshold). If you earn above the threshold you pay 12% of your earnings between £162.01 and £892 per week. You pay 2% tax on any taxable earnings above this. The rates change at the start of every financial year. Further details can be obtained from HM Revenue and Customs.
It is always important to check that you are paying the correct tax. If your income has varied over the year, you may be due a refund on the tax you've paid because you didn't use your Personal Allowance. Use the Inland Revenue Tax Checker to work out how much tax you should be paying on your wages. If you have paid too much tax, you will need to complete form P50.
Special rules if you only work in the holidays
There is no longer a special system
for students who only work in the holidays - this changed in April 2013. If you are only working in the holidays and will be earning less than your personal allowance, speak to your employer.
Applying for a national insurance number
If you are employed or looking for work, you must have a NI number (or have at least applied for one). NI contributions help finance the National Health Service (NHS). By making contributions, you also build up your entitlement to certain social security benefits, including the State Pension.
If you don't already have a NI number you must apply for one:
- as soon as you start work
- as soon as you or your partner claims benefit
- as soon as you come to the UK and have the right to work or study here
To apply for a NI number, you will need to telephone the Jobcentre plus National Insurance allocation service helpline on 0345 600 0643. They will make sure you need a number and arrange for you to undertake an evidence of identity interview.
During this interview you will be asked to supply the following information:
- telephone number
- employer’s name and contact details
- if you are an overseas student, confirmation that you hold a valid student visa
- if you are an EEA national, confirmation of your nationality
You are allowed to work while you are waiting for your NI number to be issued More information and contact numbers can also be found here.
Is there a 'student tax code'?
At present there is no student specific tax code but this has been under review for the past few years. Further information on students and tax can be found on GOV.UK