When do I pay tax?

 

Whether you work during the term-time or just in the holidays – full-time or part-time – you are eligible to pay income tax on your earnings. However, everybody can earn a certain amount tax-free in each tax year; this is known as your ‘Personal Allowance’. The tax year begins on 6 April and ends on the following 5 April.

 

How do I pay income tax?

 

If you are employed, employers have to deduct it from your pay.  If you are self-employed, you are responsible for keeping records of your earnings and paying the tax due. 

 

What are tax allowances?

 

All taxpayers have a Personal Allowance - which is the amount they are allowed to earn before they pay tax. For the tax year ending 5 April 2012, this figure is £7,475 per annum. For the tax year ending 5 April 2013, the figure is £8,105. Tax is payable on all earnings over this.

Extra allowances are given in some circumstances, such as Blind Persons Allowance.  If you think you may be eligible for extra allowances you should visit the HM Revenue & Customs website www.hmrc.gov.uk for more detailed information or call 0845 302 1431.

 

How does my employer know how much tax to deduct?

Your tax code tells your employer how much you have earned in the current year and how much tax (if any) you have paid so far in the current tax year.  This information enables them to calculate the correct amount of tax due from your next pay packet. This information only relates to the current Tax Year, which runs from 6 April to 5 April the following year.

 

What is a tax code?

 

The tax code is used by your employer to work out how much tax to deduct. Your tax code will appear on your payslip, P45 or P60 (see below).

 It will be made up of some numbers and a letter. 747L means that your full Personal Allowance of £7,475 is being taken into account. A tax code with ‘BR’ means you are being taxed at the Basic Rate (currently 20%) and your Personal Allowance is not being used; this is most commonly applied for second jobs.

 

What are the forms P45, P46 and P60?

 

When you leave a job, your employer will issue you with a P45; you should keep this and then give to your new employer when you next work. If you have not worked previously – or are starting a second job – you will need to complete a P46 form.

A P60 is issued by your employer, detailing your earnings and tax deductions for the tax year just completed.  You will not be able to get a duplicate.  Keep these forms in a safe place, as they are important and you will need them when you start a new job or make a tax refund claim.

 

If I only work in vacations, do I need to make special arrangements?

If you only work in the university vacation period you can ask your employer for a P38(S) to complete as soon as you begin working for them; this will ensure that the employer does not deduct tax from your wages (provided that the total income for the period is not expected to exceed the Personal Allowance of £7,475).  You will not get a P45 when you leave. Please note: this is a voluntary arrangement, so you may find that some employers do not offer this option.

 

What if I am a student from abroad?

International students are still eligible to pay tax and make National Insurance contributions. You may be able to claim a refund when you leave the UK by completing a P85 form and sending it to the Tax Office; ask your employer for this form when you finish working for them.

 

How do I get a tax refund?

Your Personal Allowance is spread across the year and so you normally begin paying tax as soon as you start earning. This can sometimes lead to you paying tax despite earning less than your allowance in the tax year. If this is the case, then you can claim a refund.

If you have had two jobs at any one time, you will also have paid tax as you only have one Personal Allowance. Again, at the end of the financial year you may be entitled to a refund – if your total earnings have not exceeded your allowance.

 

Please visit www.direct.gov.uk/studenttaxadvice and use the tax calculator to work out if you are entitled to a refund and what steps to take next.

 

The information on this website intended as a general guide, not an authoritative statement of the law.

 

Useful Contacts

 

Kent Union Advice Service, Mandela Building, University of Kent, Canterbury

 

Tel: 01227 824200 for an appointment

Tel: 01227 827724 for the advice line

E-mail: advice@kent.ac.uk

 

Tax Enquiries:

Tel: 0845 302 1431

www.direct.gov.uk/studenttaxadvice