Here at Jobshop, we often get a lot of students asking about tax – why they’ve been taxed, should they pay tax, and do they have to pay tax?
So, we have put together a guide to clear up a few queries!
Everyone in the UK is given a personal allowance of income that they can earn before they have to pay tax. This is usually £12,500 per year. People pay tax in the UK to cover important public services, like the NHS. The Tax threshold is set by HRMC (Her Majesty’s Revenue and Customs).
If you are a student with a part-time job, you probably will not be working over 20 hours per week. Based on 20 hours and receiving the government minimum wage you will not exceed the £12,500 threshold, so therefore won’t pay any tax.
However, there are still circumstances and situations where a student employer may be taxed incorrectly. This could be because a student has two jobs, and has yet to inform the tax office. You can work between two jobs and not pay tax on either, but you must split your tax code across your two lots of income. If you do not split your tax code the tax office will assume that between the two jobs, you are earning more than the given threshold, and they will place you on emergency tax.
To avoid any deductions from your income, you should call the tax office as soon as possible and ask them to split your tax code across both of your incomes.
They will ask you for your national insurance number, so make sure to have this to hand, as well as any other payslips or relevant information. Everyone who works in the UK must have a National Insurance Number for administration and tax purposes. For full details of how to apply for this can be found on our Blog page: https://www.gkunions.co.uk/news/article/8887/How-to-get-a-National-Insurance-Number/
It is a legal requirement and if you do not have it, you MUST apply for one either in advance or as soon as you begin working.
Without a National Insurance Number, the tax office will not know your identity or your circumstances, and place an emergency tax on your earnings. You might know that you are a student and that you are not earning above the personal income threshold…but how will the tax office know? If you are not a UK citizen, haven’t lived here for very long, haven’t provided a National Insurance Number, how will they even know who you are!
Some students have had deducted from their income considerable amounts of money over time because they either didn’t know they needed a National Insurance Number or just didn’t get round to applying for one! This was a very distressing experience for them and we don’t want this to happen to you!
It is possible to get a rebate of tax if you are incorrectly taxed, but it is a lot harder without a National Insurance Number. The HMRC will have great difficulty finding you on their database without it!
Remember, it is YOUR responsibility to apply for a National Insurance Number and it is you must get this organised ASAP!
Your employer is not responsible for sorting out your tax, this is down to you!
For more detailed further information about tax, we would advise checking the government’s official pages here: https://www.gov.uk/browse/tax/income-tax