Students working while studying may need to pay Income Tax and National Insurance. This page can help you find out:
- if you need to pay Income Tax and National Insurance
- what happens if you work in the holidays – in the UK or abroad
- how to register if you are self-employed
- who to contact if you are a foreign student working in the UK
Tax and National Insurance if you work for an employer
If you work for an employer during term-time, any Income Tax and National Insurance due will be deducted from your wages before you receive them. This is known as Pay As You Earn (PAYE).
Everybody can earn a certain amount before they start paying Income Tax – this is the personal allowance (£6,475 for the tax year 2010-11).
For the tax year 2010-11, you begin making National Insurance contributions when you earn above £110 a week (the earnings threshold). To find out more about Income Tax and National Insurance, follow the links below.
Tax forms when you leave a job
When you leave a PAYE job, your employer will give you a Form P45. You’ll need to keep this safe and give it to your next employer – to make sure you don’t pay too much tax in the future. The following link will take you to the Direct.gov website which will explain more.
Special rules if you only work in the holidays
If you’re a full-time student with a holiday job, you may not need to pay tax through PAYE (you will still pay National Insurance if you earn more than the weekly threshold).
You can ask your employer for a form P38(S) (or download it below) if all the following apply:
- you’re a full-time student in the UK, only working in the holidays
- you’re returning to full-time education after the holiday
- your total income for the year is below the personal allowance
If you have a part-time job during term time, you can’t use form P38(S) just for your holiday job. Your employer will take care of the paperwork to make sure you don’t pay too much tax.
Think you might have paid too much tax?
If you think you’ve overpaid your income tax, use the student tax checker on the HMRC website to find out if you could be due a refund.
Tax and National Insurance if you’re self-employed
If you work for yourself, you won’t have an employer to sort out tax and National Insurance for you.
Instead you’ll need to fill in a Self Assessment tax return each tax year, declaring your income and expenses.
This allows HM Revenue & Customs (HMRC) to work out how much tax you need to pay.
Registering as self-employed
You should tell HMRC as soon as you start working for yourself (you can’t register in advance). To register, call the ‘Newly Self-Employed Helpline’.
To find out more about tax and National Insurance for the self-employed – and how to complete a tax return – follow the links to the Direct.gov website below.
Working abroad in the holidays
If you normally live and study in the UK but work abroad during the holidays, for tax purposes you’ll still count as a UK resident for that tax year. You will be liable for UK tax on anything you earn abroad above the personal allowance.
However if your overseas employer also taxes you, and you aren’t able to claim tax back directly from the foreign authorities, you’ll probably be able to claim a deduction or credit in the UK.
Ask your Tax Office for details if this applies to you.
If you normally live in the UK and then work abroad for a UK employer you will be required to pay National Insurance while you are abroad.
If you work abroad for a foreign employer you will not normally pay National Insurance in the UK, but you may have to pay foreign contributions. Sometimes these can count towards Social Security benefits back in the UK.
If you’re a foreign student working in the UK
If you work in the UK while studying, you’ll normally pay UK tax and National Insurance as described above.
However, you may be entitled to reclaim tax you’ve paid when you leave by filling in a form P85 and sending it to your Tax Office – your employer will have the details.
Who can help?
Talk to your employer and make sure that all forms are correctly filled in before you start your job.
For more information and to download a P38 form visit: www.hmrc.gov.uk/forms/p38s.pdf.
To find your local tax office or for more guidance visit: www.hmrc.gov.uk/students/fagp38s.shtml.
Find out about the financial help that’s available to young people in education and training and make sure you’re claiming everything you’re entitled to by visiting Directgov – Financial Help for Young People.
Download an at-a-glance guide to the financial help you’re entitled to with the Learning and Skills Council (LSC) financial eligibility checker, which you can find on the Directgov website.