You’ve just secured your student loan and you’re spending it wisely on books, accommodation and general living costs, but you may have worked out by now that your loan may not stretch as far as you think.
Getting yourself a part-time job should help as it will alleviate the tug on the purse strings, much needed when you’re trying to go out with your new found friends, and it will add value to your cv. Plus you wont have to pay tax on your wages because you’re a student, right? Err, wrong!
When you work as a student you’ll still have to pay income tax if you’re earning more than £192 a week or £833 a month (this is your personal allowance) along with national insurance if you earn more than £153 per week. If you don’t earn more than your personal allowance you don’t have to pay any income tax. Any amount you earn above your allowance is taxed at 20 per cent initially, with much higher incomes eventually taxed at 40 per cent and more.
Similarly, if you decide to go and work abroad in the holidays, but you normally study and work in the UK, you’ll have to pay tax on anything that you’ve earned above your personal allowance, but you wont pay be expected to pay UK national insurance.
Most employers will deduct tax from your wages through PAYE (‘Pay As You Earn’) and this is calculated over a yearly period, meaning that although you may have a short-term job, you’ll pay tax on your income as though your job was year-round. This usually results in being entitled to a refund at the end of the tax year.
However, there is some good news, if you don’t earn above these limits then you won’t have to pay tax, which applies to 80% of fulltime students who work, and you don’t pay tax on any student grants and bursaries.
So, if you are going to work when you’re at university, just be mindful of the amount of hours you’re doing otherwise you’ll have to start paying tax like the rest of the working population.