Placement year

zja10

hi all,

i have been offered a placement for a year out as a quantity surveyor. As i am a student, any idea's as to how much i will be taxed during this period?

any advice is much appreciated.

techno_geek

Congrats on getting your placement!

Tax-wise it depends how much you'll be earning...

If it's less than the taxable amount, make sure you inform your employer before you get paid otherwise tax will be deducted.

If it's more than the non-taxpaying threshold, your employer should make sure you're taxed correctly (but contact your local tax office if there's any confusion).

jennifernil

If you do not already have a Tax Code Number you will need to apply for one.
Students do not get any special tax treatment, just the same allowances as everyone else. You will also have to pay National Insurance.

If your placement covers parts of 2 tax years and you do not have any other jobs in those years, depending on how much you earn, you may be entitled to a small tax refund after you stop working. NI cannot be refunded.

Poppy9

If your placement covers September to August then you will cover two tax years. Everyone is usually put on the normal basic tax allowance and if you overpay tax in one tax year then you will automatically get it back through PAYE.

ftbworried

Hi

Take a look at https://www.listentotaxman.com If you put in your gross salary, it will tell you how much you will come out with after tax- it's pretty accurate (most people's tax code is 503L).

Like others have said, UNLESS you also have a job at uni you may be entiteld to a small tax refund because you haven't used any of your tax-free allowance (the amount you are allowed to earn without paying tax) in the tax year so far.

zja10

hi guys, many thanks for your responses!

i do not currently have a job while at uni - i'm lazy!

and the gross wage is £14k for the placement year.

some people are saying i may be eligible for a rebate.

can you please elaborate........

im looking at starting in august till august 08, so will it cover 2 tax years?

jennifernil

Yes you will cover parts of 2 tax years. The next tax year is 6th April 2007 to 5th April 2008, then 6th April 2008 to 5th April 2009.
Your tax code reflects your tax free allowance, so an allowance of £5035 becomes a code of 503. If you are paid monthly then this is divided into 12 and set against your month's pay. So if you earn £14000 p.a , £1166 pcm, you get about £420 of it each month tax free and the other £746 is taxed.

Each month you get another tax free amount so it is all sort of added up. However if you have not worked before the August then you will not have used your previous 4 months allowance so once you have a code number this will be taken into account and this unused allowance set against your earnings for the whole year, so you will pay less tax each month that you would have otherwise.

Until you get your code number you will only get the normal monthly allowance. Once you get your code number your employer will use it to adjust your tax and you will get back what you have overpaid. Not sure exactly how it is done, but it may be that in August and September you would not have any tax to pay as you would not have used up all your tax free allowance for the year that far.Then in October you will pay normal tax. Your employer's payroll dept. will sort it all out, and it is quite easy to check it is correct.

In the second year you will only get the normal monthly allowance from April as the tax man does not know that you are stopping work in the August, so you will continue to pay the same tax each month then. Once you stop working you will get a P45 (I think) from your employer showing what you have paid. At the end of the tax year you should also get a P60 showing all your earnings and tax. (not sure on the exact timing of these forms)

As you still get a full year's allowance, if you only work the 5 months you will have paid too much tax and can claim it back. You may have to wait until April 2009 to do this, but ask at your local tax office as they may allow you to reclaim right away.

However, if you get another job in the same tax year you give your employer all the forms and they continue to use your code number to deduct tax. Then it will all be evened out over the year and you will not need to make a claim for a refund.

Hope you follow all that!