Tax Advice for Students: Rules When Paying Tax, National Insurance

October 26, 2011 by  Filed under: Taxes 

Working While Studying? Here’s Tax Advice for You

Students also need to take heed of invaluable tax advice, particularly those who are studying while working part-time. Even those who are working only in the holidays need tax advice. They may be required to pay income tax as well as National Insurance. At the same time, they may also take advantage of some employment rights.

This tax advice guide will help you with questions such as what rights you’re entitled to as a working student, and when to pay National Insurance contributions and taxes.

What Tax Advice Employers are Supposed to Follow

Your work may only be part-time, or on casual or temporary basis, but your employer still has tax obligations to meet, which include:

– Taking a deduction from your wages to pay National Insurance and income tax
– Giving payslips to their employees as well as P60 every tax year
– Giving employees P45 once they leave their job

Before accepting cash payments from your employer, be aware that it’s against the law to pay employees in cash without any deductions for National Insurance and income tax. If you’re going to accept cash payments, chances are you’re going to lose employment rights, and end up paying National Insurance contributions and income tax yourself.

Working Students’ Employment Rights

There are employment rights and benefits students are entitled to. You don’t need tax advice to know that you’re qualified for these rights, even if you’re work is part-time, temporary, or casual. These rights include:

– Being paid holiday pay
– Receiving the national minimum wage at the very least
– Receiving protection from discrimination

What Happens if You Don’t Pay National Insurance and Tax?

Paying tax on your wages is required for students, unless of course if they’re a full-time student residing in the UK, are going back to studying full time after the holidays, or only work during the holidays.

For students, their total income encompassing the whole tax year should be lower than the Personal Allowance.

This Personal Allowance is entitled for everyone, and for the tax year 2011-2012, the Personal Allowance is £7,475. If ever your total income is lower than this amount, you don’t have to pay income tax. Students should remember this advice if they don’t want to overpay the taxman.

Another thing, to claim income tax without tax deductions, the P38S Student Employees form must be filled out and submitted.

As for National Insurance contributions, these payments are made to ensure you receive state benefits as well as the State Pension once you retire. The contributions have to be paid if your earnings go over £139 a week. What this means is that even if you work just one single week every year but earn more than £139 weekly, you still need to pay for National Insurance.

On the other hand, if your earnings are below £139 a week, you don’t have to pay the insurance contributions.

Now that you’re aware of the tax obligations and benefits meant for students, you’ll have a better chance at keeping track of tax records and where your money has gone. Use this tax advice as your first step at becoming a taxpayer of the UK.

For professional tax advice for your company accounts on filing of tax returns visit our website at

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