Tax rules for students – what exemptions there are while studying and tax you have to pay

As a student, financial uncertainty is often tied to the territory – but beyond that, understanding how taxes work can be especially difficult.

Many students in the UK work part-time to make ends meet during their studies and many may initially not know what taxes to pay.

Here we take a look at which taxes you have to pay as a student and which you don’t – and whether you may be entitled to a student reimbursement.

READ MORE: Can Students Claim Universal Credit? Those are the rules and how much you get

Do students have to pay income tax?

Students who work alongside their studies, like other employees, are subject to income tax and social security contributions.

However, you only have to pay income tax if you earn more than £ 1,042 a month. This is your personal allowance which is currently £ 12,570 per year.

If your part-time job is less profitable, you don’t have to pay taxes. Income between £ 12,570 and £ 50,000 is taxed at a rate of 20%.

Most employers deduct taxes from your wages through Pay-As-You-Earn (PAYE). If you paid too much tax, you are entitled to a refund at the end of the tax year.

Social Security, which contributes to government benefits, is payable on all incomes over £ 166 per week. If you make between £ 166 and £ 962 a week, you’ll pay 12% of that in Social Security contributions.

Do students have to pay council tax?

Students are exempt from council tax so you don’t have to pay it. Some apprentices and trainees do not pay any council tax, not even under 18-year-olds.

Are Student Loans Taxable Income?

Student loans do not count as taxable income and therefore do not count towards your personal allowance of £ 12,570 per year.

Scholarships, grants, and grants are also exempt from income tax, as are some government benefits, including disability allowance, personal independence payment, and universal credit.

How do I get a student tax refund?

Since your employer uses PAYE to process your tax payments, you may be charged too much at first – but you should be able to claim this back.

Overpayments are usually the result of an incorrect tax number (which is listed on your pay slips). You can learn more about which tax number to use here.

HMRC – also known as the Taxman – may send you a P800 tax calculation with a refund if they believe you paid the wrong amount of tax.

However, this doesn’t always happen, so you may have to investigate it yourself. Contact HMRC with your National Insurance Number, income details and P45.

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