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Students and tax

13 April 2023

Students that work may need to pay Income Tax and National Insurance. Employers are required to calculate the amount of tax they need to pay on the basis that the students would be working for the rest of the tax year.

Tax Obligations for Working Students

Working students may owe Income Tax and National Insurance. Their employers calculate these taxes. They assume the students will work for the rest of the tax year.

This situation can indeed result in an overpayment of Income Tax. However, students can take steps to rectify this. If a student finds that they have overpaid tax due to their summer earnings, they can contact HM Revenue and Customs (HMRC) to explain their situation.

HMRC can adjust their tax code for the remainder of the tax year to ensure they are not paying too much tax. Alternatively, if the tax year has ended, students can claim a refund by filling out a P50 or P53 form.

It’s also worth noting that students who work only during the summer can plan their finances accordingly. They can set aside a portion of their earnings to cover potential tax liabilities. This proactive approach can help avoid surprises at the end of the tax year.

Finally, students should remember that tax laws can change. Therefore, it’s important to stay informed about the latest tax regulations and allowances. Consulting with a tax professional or seeking advice from student financial services can also be beneficial.

How to Claim a Tax Refund

In addition, students who have multiple jobs or change jobs during the tax year should be aware that their tax-free personal allowance is usually applied to their main job’s income. This could potentially lead to overpayment of tax on their secondary income.

If a student believes they have overpaid tax but are still working, they can contact HM Revenue and Customs (HMRC) directly. They can explain their situation and provide necessary documents to support their claim. HMRC will then review the case and issue a tax refund if applicable.

It’s important for students to keep track of their earnings and tax payments throughout the year. This will help them identify any discrepancies and take timely action. They should also consider seeking advice from a tax professional if they are unsure about their tax obligations. Remember, understanding and managing taxes effectively is a crucial part of financial literacy.

Source: HM Revenue & Customs Tue, 11 Apr 2023 00:00:00 +0100

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