Student working over the summer? Make sure you pay the right tax

Former_MSE_Wendy · 24 July 2008 at 4:02PM

If you're a student working over the summer to earn some cash to keep you afloat or fund those boozey nights out, make sure you're paying the right amount of tax.

This only applies for those working JUST in holiday time

You and your employer need to fill out a P38(S) form, providing you're only working during the holidays and going to earn less than £6,035 over the year.

This is a declaration of your student status and will ensure you won't be placed on an emergency tax code and will therefore be taxed the right amount of money.

The £6,035 includes the £600 increase to the basic rate limit announced in May this year. Although this change actually takes place in September 2008 the increased Personal Allowance will be backdated to the start of the financial year.

The tax rules

Students earning under £6,035 will not pay income tax.
Those earning above, will have to make payments.
The student must be in full time education at the time of working and plan to be in full time education by the end of the next tax year – 5 April.
Students will not pay any National Insurance Contributions (NICs) if they are paid less than £105 a week or £453 a month.
But if the student is paid more than this amount, they will pay National Insurance of 11% on any salary over this amount up to £770 a week or £3,337 a month plus 1% on any amount above these figures.

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Birdie100 · 6 August 2008 at 2:03AM

Thanks Wendy for explaining the National Insurance rules. I'd always wondered how exactly it was being calculated. It still frustrates me though as a student that I can nominally not be paying tax, yet am still forced to pay NI contributions (and cannot reclaim them, or even "spread" it over the year.) Interestingly though, the HMRC website page here http://www.hmrc.gov.uk/students/nic_further_info_12_1.htm has differing figures to those provided by you. Perhaps you could investigate who is right here, for completeness' sake. Thanks.

MSE UPDATE: - Hi Birdie100, the rates we mention are correct as per this link from HMRC. We've confirmed with HMRC that the link you found is out of date (06/07 figures) and it'll get this page updated asap. Well done for the good spot

phoebe03cat · 6 August 2008 at 9:03AM

My daughter (at uni) works a few hours regularly each week and odd weeks in the holidays but still doesn't net over £6,035 pa. Should she still fill in a P38?

sanya1995 · 6 August 2008 at 9:05AM

hi can you let me know at what age can a student start working ?????? my friends daughter is nearly 14 very very bright and is very interested in doing some part time work please help thanks

Tillystinks · 6 August 2008 at 9:44AM

Hi

Just to inform you, most employers will not "stop" deducting tax altogether. The HMRC are unclear as to what employers should do and do not tell employers what tax code to use.

I work in Payroll, and quite often have quite a lot of student on them. What most employers do is put you on the standard tax code of 543L (soon to change in september). But please remember your tax free allowance is divided between the 12 months of the tax year and not until your reach the earnings of £5430, so if you work full time in the summer please expect to pay tax, but if once your return to studies contact your local tax office and they will ask you to write to them with a copy of your P45 and you should get the tax paid back. Please don't quote me on this, it is complety up to the tax office if you should pay tax or not.

The reason why employers will more than likely do this is they can get into a lot of trouble if they dont deduct tax from you and they believe the employer should have. They will be fined extremly heavily for breaching the rules, so please dont have a go at the people in payroll, we have to do as we're told.

jenny_penny_2 · 6 August 2008 at 11:44AM

Hi,
I'm a student and I currently have two part time jobs during summer and I earn less than £6,035. However I was told that because I'm working two jobs that I have to pay tax. Is this correct? Do i still have to fill in a P38?

Lokolo · 6 August 2008 at 12:14PM

Birdie100 wrote: »

Thanks Wendy for explaining the National Insurance rules. I'd always wondered how exactly it was being calculated. It still frustrates me though as a student that I can nominally not be paying tax, yet am still forced to pay NI contributions (and cannot reclaim them, or even "spread" it over the year.) Interestingly though, the HMRC website page here http://www.hmrc.gov.uk/students/nic_further_info_12_1.htm has differing figures to those provided by you. Perhaps you could investigate who is right here, for completeness' sake. Thanks.

Income tax and National Insruance are different things. You cannot not pay NI. Simple as.

Also the rates are for every amount above £105 a week you pay 10% I think, something to that amount for National Insurance. Which you cannot get off! You have to pay it no matter what!

Lokolo · 6 August 2008 at 12:15PM

jenny_penny wrote: »

Hi,
I'm a student and I currently have two part time jobs during summer and I earn less than £6,035. However I was told that because I'm working two jobs that I have to pay tax. Is this correct? Do i still have to fill in a P38?

Thats because the payroll systems on both jobs won't be linked. You will most probably pay tax on one or both. Don't worry about it. At the end of the tax year you will get P60s from the jobs, and if you have paid tax but P60s add up to you earning less than £6,000 (currently only £5245 but going up in a month to the £6000 stated), then you can claim it back.

You get P60s at the end of the tax year which is April.

Lokolo · 6 August 2008 at 12:17PM

phoebe03cat wrote: »

My daughter (at uni) works a few hours regularly each week and odd weeks in the holidays but still doesn't net over £6,035 pa. Should she still fill in a P38?

No. She can always claim back the money at the end of the tax year if she has paid tax. Treat it as an Easter bonus.

Lokolo · 6 August 2008 at 12:19PM

sanya1995 wrote: »

hi can you let me know at what age can a student start working ?????? my friends daughter is nearly 14 very very bright and is very interested in doing some part time work please help thanks

Being bright won't change an employers mind that shes 14. She might be able to find a job but very unlikely as employers have conditions that they mus be at least 16.

I got a job at 15 working selling programmes but this was very lucky as it was only because of my friend who was already working there asked me if I wanted a job.

Only thing I can suggest is things like dog walking, washing cars etc. Yeh its crap but its what shes going to get for now being only 14.

kitty1801 · 6 August 2008 at 2:14PM

jenny_penny wrote: »

Hi,
I'm a student and I currently have two part time jobs during summer and I earn less than £6,035. However I was told that because I'm working two jobs that I have to pay tax. Is this correct? Do i still have to fill in a P38?

The rules are that if you are ONLY working over the holidays and going to earn less than £6035 from 06/04/08 - 05/04/09 then you are not liable to pay tax.

In your case, you should ask both employers for a P38(s) to complete.

Student working over the summer? Make sure you pay the right tax

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