• Income tax FAQs

► Income tax FAQs

Income tax is the contribution from workers to government spending on services such as the National Health Service, education, defence, and social security. If you earn over a certain amount of money per year you will need to pay this tax – the more you earn, the more you pay. As a student you can be taxed. You must always supply your National Insurance Number (NINo) to your employer when you start any employment. You may be able to reclaim income tax but you cannot reclaim NINo contributions.

• Can I be taxed by my employer?
• What is income tax and who pays it?
• What is personal tax allowance?
• When will I start to pay tax?
• Tax rebates
• Can international students claim tax rebates?
• Important documents
• More information and resources

Can I be taxed by my employer?

Yes. The tax year runs from 6th April to 5th April and students are not exempt from paying income tax. 

What is income tax and who pays it?

Your employer will deduct income tax from your wages and the amount deducted will appear on your wage slip, usually entitled ‘PAYE’ (which stands for Pay as You Earn). The employer will pay the tax directly to HM Revenue and Customs (HMRC).

I’ve heard I have a “Personal Tax Allowance” – what is this?

You do not pay tax on all of your earnings. Everyone receives a personal allowance and your employer will be made aware of this rate. The amount will vary according to circumstances, but the standard personal allowance in the tax year 2012/2013 is £8,105, based on a weekly allowance of £155. This means if you earn less than £8,105 you will not pay any tax. Income tax deductions will be made at 20% for all income up to £34,370 in the tax year. In addition to tax, if you earn over the primary threshold of £146 per week you will also be deducted National Insurance contributions. For more details on Tax personal allowances, please visit www.hmrc.gov.uk (link opens in a new window).

When will I start to pay tax?

You will start to pay tax immediately, not after you have earned your personal allowance, as the deductions are spread over the year according to your weekly earnings. However, if you start work a few months into the tax year you may not pay it straight away – it depends on your wages and individual job circumstances. On commencing your employment, you should give your  employer a P45 (from your previous employer) or a P46 (download from the HMRC website where you can get all the latest and most up to date information. If you do not give your employer a P45 or complete a P46, they are required to deduct income tax from your pay.

I have earned less than £8,105 and have been taxed – what do I do?

Don’t worry. You can make a claim for a tax rebate and get the money back by one of the following ways.

• Automatically resolved through your wages – once your employer has notified HMRC that you are now on the company’s payroll, HMRC will inform your employer that you should be placed on a particular tax code (your tax allowance). Once this has been notified, it should automatically follow that you receive a tax rebate in your next weeks/months pay.
• Apply for a rebate when your job finishes – if your job is only for a short period of time, then once you finish the job you need to ask your employer for a document called a P45 – this will show all of your earnings in that period of employment and any deductions made from your wages. You will then need to take your P45 document to HMRC to activate a rebate.
• Apply for a rebate at the end of the tax year – at the end of the tax year your employer will provide you with a document called a P60, which shows your earnings & also any tax/national insurance deductions made during the year. You will need to take your P60 document to HMRC to activate a rebate.

I am a European/international student – can I still claim a rebate?

Yes. European/internationals making a claim for a rebate prior to leaving the UK can arrange for the rebate to be sent to their home address, but HMRC will only send the rebate in pounds sterling.

Important documents

P45 – must be given to you by your employer when your job finishes, it shows your total earnings/tax/national insurance deductions during your employment. You will need to provide this document to your next employer or too much tax may be deducted.

P46 – if you don’t have a P45 to give your employer when you start work (eg never worked before) then the employer will get you to complete a P46. You may find that you are placed on an emergency tax code (ie you are automatically taxed) while the employer waits for information from the Inland Revenue Office over your tax code status.

P38 – if you take on a job purely for the university’s vacation period and you know you will not exceed the personal allowance you can complete a HMRC Student Employee form (P38). Your employer may also have copies to give you. Complete the form and return it to your employer. This will prevent tax being deducted. 

Your wage slips – by law you are entitled to a weekly/monthly payslip, always keep them as they are important and may be needed for future reference purposes.

P60 – your employer must provide you with this document (by law) at the end of the tax year, always keep them as they are important and will be needed for future reference purposes when dealing with the Inland Revenue – they are official proof you have worked and that you have had the appropriate tax/NI deductions made.

CAUTION! – Some employers try to avoid their legal obligations towards employees by insisting that they don’t need to officially record you on the payroll, don’t provide you with a payslip, try to pay you in cash, or they’ll make out that if you are recorded on the payroll you will be taxed more – all of these allows them to avoid paying employer and employee National Insurance contributions.

They are breaking the law by doing so and it could have repercussions for you with HMRC/National Insurance Contributions Office.

More information and resources

• Income tax and National Insurance are managed by a government department, HM Revenue and Customs. You can check the HMRC website (link opens in a new window) for more information about income tax and the latest allowances.
• Fact sheets including one on Income Tax
• Useful links page