Income Tax

What is Income Tax? 

Income Tax is a tax on income. Not all income is taxable - and you're only taxed on 'taxable income' above a certain level. Even then, there are other reliefs and allowances that can reduce your Income Tax bill - and in some cases mean you have no tax to pay.

Do students have to pay income tax?

Not necessarily, it depends. The tax year runs from 6th April one year to 5th April the next. In the tax year 6th April 2009 to 5th April 2010, you do not have to pay tax if your total earnings are £6475 or less. The weekly tax-free allowance is £124.52 per week.

If you are self-employed, e.g. doing tuition or translation work for an agency or working freelance for an individual or a company, keep a record of your earnings as you will have to complete a tax return for the work done during the tax year. If you send your form by 30 September, your tax & N.I. payments will be calculated for you. The paper return must reach the Inland Revenue by 31st October following the end of the tax year, online return must be completed by 31st January following the end of the tax year. Please note – it is your responsibility to notify the Tax Office that you are self-employed and you must do this within 3 months of starting work. NB: Students from outside the UK and EU are not allowed to be self-employed

How do I pay income tax?

If you have not worked so far during the current tax year and are offered a job, your employer will ask you to fill in form P46 before you start work. The Inland Revenue can then give you a tax code, which tells your employer how much tax to take from your wages. Until you are given a tax code related to your circumstances, you would be taxed on an emergency code. This may be higher than what you need to pay, but you’ll be repaid later.

If you have already had and finished a job since 6th April, you should have form P45 from your previous employer confirming the end of that job and showing your earnings, your tax payments and your tax code for that particular job. You give part of it to your new employer. Always keep your P45s safe, as you cannot get copies! Ask your last employer for a statement of earnings, if lost. 

What happens if I only work during vacations?

If you only work during university vacations and you think your total income for the whole tax year (excluding grants etc.) will be less than £6475 up to 5th April 2010, tell your employer you need form P38 (S). Fill in your part and return it to your employer to submit.

Please Note:

• Form P38 (S) is not available from the Careers & Employment Service and cannot be used as a general tax exemption form, because it relates to one specific job.
• Form P38 (S) cannot be requested for term-time jobs, because it relates to vacation jobs with fixed start and finish dates and is intended to save the admin work involved in putting you on the tax system for such a short period.
• You cannot fill in a P38 (S) for work during Easter or summer vacation of your final year.  

What happens if I have more than one job at a time?

If you have already given your P45 to your first employer, ask the second for a form P46. On the P46 indicate that this is your second job. You will be given a basic rate tax code. However, if you think that you will be earning less than the tax allowance (£6475 in the tax year 6 April 2009 - 5 April 2010), it may be possible to split this allowance between the two jobs. You will need to contact the second employer's tax office, quoting their PAYE reference number.

What do I do if I want to claim tax back?

It is best if you can wait until after the end of the tax year to claim your tax back. If you claim before then, the Tax Office may insist that you sign a declaration that you will not work again during this tax year.

Get form P50 by  contacting the local Tax Office, Aidan House, All Saints Business Centre,  Newcastle upon Tyne, NE1 2TT, Monday – Friday 8.00am – 8.00pm, Saturday 8.00am – 4.00pm. Tel: 0845 302 1456. Send the P50 with your P60 to the employer’s Tax Office. (Keep a copy of your P60 for your own records). On the P50 list all your jobs during the tax year. NB: it may take a while, but you will get your tax back!

If you are an international student and you will be leaving the UK before 6th April, first contact your employer and ask for your P45 or a statement of earnings, if you do not already have either. Then contact your employer’s Tax Enquiry Centre and explain your situation, request form P85 and say you have your P45 or statement of earnings ready to send. If you are returning hom after 6th April, you should apply for tax back as soon as possible from this date.  

After the end of the tax year in which you worked, your employer will send you a P60 if you are still working there. This is a record of your earnings during that tax year and all the tax and N.I. you have paid. Keep your P60 safe, as it is the only document you get proving your total annual tax and earnings situation and you cannot obtain a copy.

Who do I speak to if I have a problem with my tax?

Contact the Tax Enquiry Centre, Aiden House, All Saints Business Centre, Newcastle upon Tyne, NE1 2TT. Tel: 0845 302 1456, Monday - Friday 8.00am - 8.00pm, Saturday 8.00am - 4.00pm.

HM Revenue and Customs and the National Union of Students have produced very helpful information on tax issues. Go to: www.direct.gov.uk/studenttaxadvice  

For further information on tax go to the Inland Revenue's information page for students - (see HM Revenue and Customs link).

For further advice on finance related issues, visit the Student Services Centre, Northumberland Building and make an appointment to see a member of Welfare and International Team in Student Services.