Working Student

jue

DD who is currently undertaking her final year of A-Levels has just got a job working evenings and weekends at the local supermarket, she is working 14 hours a week. Does anyone happen to know if she will pay National Insurance and income tax on this small wage ( £5 an hour). I have told her she will definately have stoppages at source.
Also she is thinking about starting a pension fund, the supermarket do have a pension she could join but as she won't be there for more than a year she is thinking of something portable, any suggestions anyone?
Thank you all in advance.

BWZN93

Tax and NI is only paid if you earn over your personal allowance per year, which for me is £4850 (I was at uni last year too) - So you need to work out her annual income and then take tax and ni from anything over the personal allowance. I believe it roughly works out at £86 per week tax free.

As for the pension fund, it totall depends on how much she wishes to invest each month etc. If it were me, id be more inclined to put it the money into an isa throughout the next year and during her student years, which will give her an nice tax free pot at the end of her degree for deposits on rented flats, cars, new work clothes, moving costs etc.

Many graduate jobs offer good pension schemes and she could join then.

Jo xx

jue

Thank you Jo for your helpful reply.
It looks like she won't have to pay tax and NI after all. I'm sure that will make her very happy.
My DD is growing up so fast in so many ways, she's even very careful with her money... must get it from her mother

Helen_from_yorkshire

When my son, who is a student, had one job the Tax Office arranged for his tax code to be set up so that his earnings added up month by month and he would only pay tax once his earnings were over the personal allowance. There is a word for this, the Tax Office will know or some other MSE may be able to help.

My son has two jobs now though and unfortunately the Tax Office can only set up this partiuclar system when they have one job.

Savvy_Sue

Helen_from_yorkshire wrote:

My son has two jobs now though and unfortunately the Tax Office can only set up this partiuclar system when they have one job.

That's not entirely true. If he is not earning over his personal allowance in his 'main' job, the remainder can be 'transferred' to his second job. He'll need to phone the tax office which deals with his second job, I believe.

So normally he'd have a tax code of 485 on the main job, and BR on the second job. Tax only taken off on main job if he's over personal allowance on the year to date, but on everything earned in 2nd job. Until he tells tax office he is working two jobs and thinks he is paying too much tax, they check this out and if he's right send a new tax code to 2nd job.

I'd say it was only worth doing this if he is earning less than the personal tax allowance on the two jobs together. If he's less on one but over on the two together it may be easier to claim at the end of the tax year. Which brings a nice bonus! AND if these are temporary or fairly casual jobs, it may be easier to deal with all at the end of the tax year - keep copy of all P45s and P60 at the end of the tax year!

stuwilky

I believe the tax office will only consider splitting the tax codes if the total income from both jobs will be less than the personal allowance.

Its also worth noting that National Insurance is worked out for each individual pay period so if there are weeks where she works overtime she may end up paying NI, and there is no way to claim this back. Of the top of my head I cant remember the weekly amount, its around £80 I think.

Savvy_Sue

stuwilky wrote:

I believe the tax office will only consider splitting the tax codes if the total income from both jobs will be less than the personal allowance.

This didn't used to be the case when I was running a small payroll but I grant you it may be now. I had someone doing a 'second' job for me but not earning over PA in her 'main job' and she had a funny code for me like 122T, which gave her a small taxable allowance on 'my' job instead of losing 22% of all of it.

stuwilky wrote:

Its also worth noting that National Insurance is worked out for each individual pay period so if there are weeks where she works overtime she may end up paying NI, and there is no way to claim this back. Of the top of my head I cant remember the weekly amount, its around £80 I think.

Little bit more than that: I think it's £86 but in fact the employee's contributions don't kick in until £94 or thereabouts.

jue

Thank you everyone for your help, all very useful.
DD seems to be enjoying her job and is looking forward to pay day.
She will be paid monthly, I have told her about overtime, this might happen in the holidays only.

Helen_from_yorkshire

Savvy_Sue wrote:

That's not entirely true. If he is not earning over his personal allowance in his 'main' job, the remainder can be 'transferred' to his second job. He'll need to phone the tax office which deals with his second job, I believe.

So normally he'd have a tax code of 485 on the main job, and BR on the second job. Tax only taken off on main job if he's over personal allowance on the year to date, but on everything earned in 2nd job. Until he tells tax office he is working two jobs and thinks he is paying too much tax, they check this out and if he's right send a new tax code to 2nd job.

I'd say it was only worth doing this if he is earning less than the personal tax allowance on the two jobs together. If he's less on one but over on the two together it may be easier to claim at the end of the tax year. Which brings a nice bonus! AND if these are temporary or fairly casual jobs, it may be easier to deal with all at the end of the tax year - keep copy of all P45s and P60 at the end of the tax year!

Thanks but this is the info I was referring to (http://www.hmrc.gov.uk/students/work_hols_while_student_8_1.htm) maybe I didn't explain myself well enough.

We have arranged for my son's personal allowance to be split between both jobs as both casual and unsure how much will earn in tax year. Have also arranged with the Tax Office for amount above personal allowance that is taxed at 10% to be split between jobs too.