We often get asked by student Mashers about their tax status and we are not surprised in the slightest that you are confused. We are too but we do have some clarity on it so that you can plan accordingly.
In a nutshell - if you are a registered student and have completed a P38S tax form and you ONLY work in Summer, Xmas and Easter holidays then you don’t get taxed at source.
However if you do ANY work outside of holiday periods then this cancels out the tax free status and you will be taxed at source on ALL earnings throughout the year.
harsh we know…but the law.
Please also bear in mind though that you will have be able to get your tax back on all earnings under £6475.00 if we are your main employer and therefore will be eligible for a tax-rebate at the end of the year after you receive your P60 confirming the amount.
and now from the horse’s mouth…the Inland Revenue…zzzzzzzz
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“There are special rules about tax for students who only work in the Easter, summer, and Christmas holidays. These special rules do not apply if you also work at other times. If you work at other times, the special rules will not apply to any of your earnings, from holiday work or other work.
So if you are a student, and you do paid work in term time, the special rules will not apply to you. The normal rules for tax and National Insurance will apply to all your earnings, (term time and holidays) in the same way that they do for other people who are not students.
Working as an employee in term time and the holidays
Income Tax
If you had a previous job, your employer gave you a form P45 when you left. Give this to your new employer.
If you have no form P45, or you left your last job in an earlier tax year, you will need to complete a form P46 instead. Your new employer will provide this form.
Your new employer will use the form P45 or P46 to find out your tax code from the HM Revenue & Customs (HMRC). Using the tax code, your employer can work out correctly any tax you must pay.
If you have more than one job at the same time, you should contact the HMRC to get a different tax code for your second job.
You will only have to pay tax if you earn more than £6,475 in the tax year (6 April 2009 to 5 April 2010). This works out as £125 a week, or £540 a month. The tax code and the Pay As You Earn (PAYE) system spread any tax due across the year as evenly as possible. In this way, if you work throughout the year, you will pay the right amount of tax. If you give up work part way through the year, a refund may be due.
National Insurance Contributions (NICs)
You pay the same NICs whether or not you are a student. Your employer will deduct NICs from your pay if they are due.
NICs will be due for any week in which your gross pay (before deductions of tax and so on) is between £110.01 to £844 per week (£476 and £3,656 a month).
NICs are due on your pay for the week or month, so you will not get a refund if you stop working part way through the tax year.
Working as a self-employed person while you are a student
There are no special tax rules for you if you are a student and also self-employed. You will be treated in the same way as other self-employed people.
You must tell the HMRC if you start working as a self-employed person. Do this by ringing the helpline for the newly self-employed on 08459 15 45 15. You must do this within three months of starting to be self-employed to avoid paying a penalty.
Later, we will send you a tax return, on which you will declare your earnings from being self-employed.
For the full breakdown of details please click on the following link:
http://www.hmrc.gov.uk/students/work_in_term_and_hols_9_1.htm
