Student Jobs: Paying Tax & National Insurance
If you're a student and plan to get yourself a job to earn some extra cash, you'll have to pay Income Tax and National Insurance if you earn over a certain amount.
This still applies if you work abroad during your holidays, and if you're a foreign student working in the UK.
Do I need to pay tax?
If you are a student who is working while studying, you may need to pay Income Tax and National Insurance. We’ve put together this guide to help you find out:
- if you need to pay Income Tax and National Insurance
- what happens if you work in the holidays, either in the UK or overseas
- 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 that has to be paid 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, which is £10,600 for the tax year 2015-16.
This means for the tax year 2015-16, you start making National Insurance contributions when you earn more than £155 a week and pay Income Tax when you earn more than £203.85 a week.
Tax forms when you leave a job
If you leave a PAYE job, your employer will give you a Form P45. Make sure you keep this safe as you will need to give it to your next employer – this is so you don't pay too much tax in the future.
What if I only work during the holidays?
Since April 2013 it makes no difference for tax purposes if you are a student only working in the holidays. Employers must treat students in the same way that they treat other employees.
I think I’ve paid too much tax – what do I do?
If you think you've overpaid your income tax, use the student tax checker to find out if you could be owed a refund.
What if I'm self-employed?
If you work for yourself, you won't have an employer to take care of tax and National Insurance for you.
If this is the case, you'll need to fill in a Self Assessment tax return each tax year, on which you declare your income and expenses.
This allows HM Revenue & Customs (HMRC) to work out how much tax you need to pay.
Registering as self-employed
Working overseas in the holidays
If you normally live and study in the UK but work overseas 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, i.e. £203.85 per week.
However if your overseas employer also taxes you, and you aren't able to claim tax back directly from the foreign authorities, it’s likely you’ll 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 overseas for a UK employer you will have 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.
What about foreign students 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 P85 form and sending it to the Tax Office - your employer will have the details for this.