Full-time student, part-time job &savings..Income tax?

iceskatingscientist

Hi,
I am a full-time university student but I have a casual contract lifeguarding job (working mostly in summer months and only maybe 5-10hours a week term time) earning between £3000-£5000 per year. I also have un-earned income of ~£2300 (good old 7.1% from icesave) from non-ISA savings. Since I don't earn above the tax free allowance from work I assume I should not be paying tax on that!? But I'm not sure what to do about tax on my savings if the combined income is >£6475.00 by april 2010? My savings are split up into multiple fixed rate accounts all over the place. And my monthly income varies depending on how much I chose to work the month before. I'm not sure whether I should not pay tax until I know whether I earn enough and then april next year send a record of everything I've earned and they can send me a bill. Or speak to the banks to tax me on any interest that brings my earnings above £6475 for the year. I don't even know what the tax should be on that amount. Very confused, any help would be appreciated.

the_annoyed_customer

You will pay tax regardless, you have to wait untill the end of the tax year to reclaim if you are under the tax limit. But if you are sure you are going to be under print of a form from revenue and customs and hand it into/send of to the banks then you won't pay the tax on your savings. But if you wait until the end of the tax year you will need the statements saying at you were taxed your P60 (I think its called) and a covering letter stating at you want to be refunded to the local tax office. Intrest from savings should not count towards the limit of income earned

iceskatingscientist

the_annoyed_customer wrote: »

You will pay tax regardless, you have to wait untill the end of the tax year to reclaim if you are under the tax limit.

So, I have to pay tax on my income even though some months (when i have exams) I earn less than £200 and in total my earned income will be no more than £5000 for the year? It seems a little crazy I have to pay tax on income throughout the year and can only claim it back in April. In total student tax checker says I should pay no more than 10% on total (un-earned and earned) income more than £6475. Which would mean owing no more than £82.50 to the taxman for the yr, yet i'll get more than that taken away each summer month.

I guess it''s not really worth working throughout the semester time if I can't get the money until the following april. I've heard I can fill in a form and work only during the summer and not be taxed on that - think that would be best instead.

thanks

the_annoyed_customer

as I said you can down load a R40 from revenue and Customs and send it off to the banks and this will stop you from getting taxed. But if your really unsure wait until the end of the tax year. And don't limit yourself working beacuse as a student you need all the money you can get, so at the end of the day if you reclaim the tax afterwards you just get it in a lump sum, after having little bits of interest/payment deducted.

atypical

Best thing to do is contact your local tax office and explain your situation.

I think the annoyed customer is right, you'll have to pay tax on your earnings and claim it back at the end of the tax year if your income is under the £6,475 Her Majesty affords you tax free. If your income is over £6,475 but below £8,915 it'll count as savings income and be taxable at the special 10% rate. If your income is over £8,915 it'll all be taxed at 20% I think I'm right in saying.

If you only work during the holidays you can fill out the P38(S) form, more info here. No tax will be deducted but anything over £110 a week will be subject to National Insurance at 11%.

As for your savings, I think you can fill in an R85 form (the one that lets you have interest tax free) provided you tell your bank when your income passes £6,475. Though it may be easier to claim it all back at the end of the year.

There might be a way you can do it the opposite way around, pay no tax on the assumption you'll earn less than £6,475 and then pay HMRC anything you find you owe at the end of the tax year. Hence I say contact your local tax office.