Students and summer workers might have paid too much tax - how to check

HMRC sign
-Credit: (Image: Andrew Milligan/PA)

People working this summer - especially students picking up extra cash before returning to their studies - are being told to be aware of income tax, as they could pay when they don't need to. Tax expert Andy Wood raises has explained some of the lesser-known tax rules students and other part-time workers need to know about to avoid accidentally overpaying tax.

He has also explained what to do to keep on top of things and make sure you're getting paid and taxed correctly. And, if you think you're owed a refund, how to get it.

Andy said: "Understanding the tax rules can be confusing for students with part-time jobs. It's important to note that students do not need to pay tax until their earnings exceed the thresholds for Income Tax and National Insurance, which are £1,048 per month and £242 per week, making up the Personal Allowance. Employers typically handle Income Tax and National Insurance deductions through the PAYE system, simplifying the process for students."

"Self-employed students face additional responsibilities, including the submission of Self Assessment tax returns detailing income and expenses. This process enables HMRC to calculate tax liabilities accurately, ensuring compliance with tax regulations."

Tax when working abroad

Andy said: "Holiday jobs abroad have unique tax considerations. While UK tax liability applies to earnings above the Personal Allowance, working for a foreign employer may entail different taxation arrangements. Awareness of these differences is essential to avoid potential tax problems."

Paying the right income tax in the UK

Andy said: "Keeping hold of accurate records and understanding the tax procedures are important for students changing part-time jobs. Collecting a P45 form from the previous employer and providing it to the new employer ensures accurate tax deductions."

"Not doing so can result in over or underpayment of tax, leading to a range of financial consequences. Seeking guidance from HMRC can help students deal with job transitions smoothly and avoid any tax-related challenges."

How to get an income tax refund

Andy said: "If a student stops working before the end of the tax year and their total earnings fall below the annual Personal Allowance threshold, they may have overpaid tax. Using HMRC's tax checker can help the process of getting back their overpaid taxes by providing accurate information about their earnings and tax contributions."

"Students may be eligible to claim tax refunds under certain circumstances, such as overpayment of tax or ending employment mid-tax year. To claim a refund, students typically need to complete forms like P50 or P85 and submit them to HMRC."

"Students in the UK can save on taxes by leveraging various allowances and deductions, such as the personal allowance and tax relief on pension contributions. Additionally, exploring tax-efficient savings accounts or ISAs, maximising the use of tax-free allowances, and investment strategies can further boost tax savings."

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