Tax and National Insurance

  • If you have a job, you need to know how income tax works.
  • You may be eligible for a tax refund. This can happen, for example, if you stop working partway through the year.
  • If you get a holiday job abroad, you should look up how this affects your tax payments in the UK.

The government department responsible for tax and National Insurance is Her Majesty’s Revenue & Customs (HMRC).

The HRMC’s Student jobs: paying tax web pages provide information about tax and National Insurance for students.

Under certain circumstances, it’s possible for people to overpay their tax bill, and they can be eligible for refunds of some or all of the tax they’ve paid during the year. Students in part-time work are quite likely to be affected by this.

If you have already been working, you can use the HMRC Tax checker to find out whether you’re entitled to a refund.

Tax: Basic Information

  • Tax and National Insurance are deducted from students’ earnings in the same way as with other workers. However, everybody can earn a certain amount tax-free each tax year – the Personal Allowance – which changes every year.
  • If you earn less than the Personal Allowance and have paid some tax, you can claim a refund. Use the HMRC Tax checker to help work this out. An example applying to students is when their salary would exceed the Personal Allowance if they worked for the entire year (so their employer deducts tax from the paycheck based on the predicted earnings), but they only work for part of the year.
  • You should receive a P45 form when leaving a job which you will have to give to your next employer. If working on 5 April, you will be given a P60 which summarises earnings and tax and National Insurance deductions from the tax year just finished.
  • You are only entitled to one Personal Allowance in any tax year (April to April), even if you have more than one job.
  • Tax codes are found on payslips, P45s or P60s. You will either see a number followed by a letter (e.g. 1150L) or just the two letters, BR (Basic Rate – Currently 20%).
  • Employers deduct National Insurance contributions from your earnings. Visit the HMRC’s National Insurance web page for more information on this.
  • You should tell your employer your National Insurance Number (sometimes abbreviated NIN or NINO). Using it correctly will make sure that National Insurance contributions are recorded against your name and will help to prevent identity theft.
  • Students with their own businesses need to register with HMRC within 3 months. Tax is payable on profit made in excess of the Personal Allowance – a Self Assessment tax return will enable you to calculate this.
  • You should notify HMRC if you change your address.