Working Tax Credits for paid PhD students who don't pay tax??

seanspotatobusiness

I'm starting a paid PhD position (in Scotland) in a couple of weeks, and as I understand it, I wont have to pay tax on the income, because I'll be a full-time student. Am I also eligible for Working Tax Credits or are they simply refunds of tax that has been paid on income (and therefore irrelevant to me)?

Indie_Kid

Being a full-time student doesn't exempt you from tax. You're entitled to working tax credits if:
You're over 16 and work 16 hours a week and:
- are disabled and are entitled to the disability element of tax credits
- are responsible for a child under 20 for whom you receive child benefit for

or:
are 25 or older and work 30 hours or more a week.

seanspotatobusiness

sh1305 wrote: »

Being a full-time student doesn't exempt you from tax.

Are you sure? I was pretty certain that my interviewer said that I wouldn't pay tax on my income.

Edit: I'm reading now and it seems that it depends on the size and source of the funding. Most of mine will be from the BBSRC which is a government agency, but I will get an additional 15-20% from a company.

Assuming that I don't pay tax, would I still be eligible for the Working Tax Credit?

Indie_Kid

Yes I'm sure. Students don't have a special tax code. They have 647L like everyone else. (or whatever the current code is)

They generally don't pay because they don't earn enough.

MrsManda

sh1305 wrote: »

Yes I'm sure. Students don't have a special tax code. They have 647L like everyone else. (or whatever the current code is)

PhDs are different, earnings from them are generally tax free - like student loans/grants are tax free.

Char_pdc

Hi,

Congratulations on the PhD.

From my experience, PhD stipends are meant to fund living expenses throughout the duration of the course. As such they are tax free but, at least for me, additional working hours are limited by contract to 6 extra hours per week.

I think that they are approved as tax free, but will be questioned above a certain amount (I think its £20'000) as they are only meant to fund basic living expenses.

I would contact your university and ask. With regards to the company - are they subsiding your bursary per year, or is it a one-off payment at the start of your course?

seanspotatobusiness

Char_pdc wrote: »

With regards to the company - are they subsiding your bursary per year, or is it a one-off payment at the start of your course?

Well, I think the basic busary is about £13 000 (I've got it on paper, somewhere) and on top of that, the company will pay £2 500 every year. But that will still be below £20 000.

finder

sh1305 wrote: »

Being a full-time student doesn't exempt you from tax. You're entitled to working tax credits if:
You're over 16 and work 16 hours a week and:
- are disabled and are entitled to the disability element of tax credits
- are responsible for a child under 20 for whom you receive child benefit for

or:
are 25 or older and work 30 hours or more a week.

The allowance I receive is quite similar to yours (EPSRC + company). That allowance is meant to be tax-free, or, in other words, that money doesn't count for tax purposes for the HMRC.

Now, assuming you have no dependants and that you can cope with university work + additional work easily, you won't be paying taxes on any earnings from that additional work up to £6,475. In that sense, there is no difference whether you are a student or not. Following the same reasoning, in order for you to be eligible for Working tax credits, you will have to meet the conditions in this link. Obviously, PhD-related work doesn't count towards the weekly hours.

seanspotatobusiness

finder wrote: »

The allowance I receive is quite similar to yours (EPSRC + company). That allowance is meant to be tax-free, or, in other words, that money doesn't count for tax purposes for the HMRC.

Now, assuming you have no dependants and that you can cope with university work + additional work easily, you won't be paying taxes on any earnings from that additional work up to £6,475. In that sense, there is no difference whether you are a student or not. Following the same reasoning, in order for you to be eligible for Working tax credits, you will have to meet the conditions in this link. Obviously, PhD-related work doesn't count towards the weekly hours.

Ahh, right, that makes sense. Thanks

tazzy2010_2

Hi I am too a PHD student funded by BBSRC plus extra from a company and have a part time job I don't pay tax on my PhD pay at all (as its sen as a grant), I also don't have to pay council tax as I'm a student. For my PT job I do pay tax if I go over the 6000 odd threshold. Tazz

P.s. I thought it was too good to be true so phoned up council tax office and tax office - and they confirmed it all :j