Do working students have to pay tax?

Students are liable for income tax and National Insurance (NI) in the same way as other workers.

However, the good news is that you are entitled to earn a certain amount before you start paying tax – this is called your Personal Allowance. You can get information on the current allowances on the GOV.UK website.

For the 2019/20 tax year, you can earn up to £12,500 per year before they start paying income tax. So if you've got a part-time job and earn under £12,500, you won't pay a penny.

Above your Personal Allowance, the amount you pay depends on the amount you earn. In 2019/20: the first £12,500 is tax-free; you pay 20% tax on earnings between £12,500 and £50,000. Few students are likely to be earning over £46,350, but if you do, you pay 40% on this.

Most employers deduct tax from your wages through PAYE ('Pay As You Earn'), and this is averaged out over the year. This means that although you may have a short-term job, you pay tax on your income as though your job was year-round and then you're entitled to a refund at the end of the tax year.

You'll also pay income tax on income such as savings interest.

National Insurance (NI) is a contribution to state benefits, and is payable on all income over £166 per week. Between £166 and £962 per week, you pay 12% of your income in NI contributions. Any earnings above £892 per week are charged at 2%.

The student Job Shops' organisation National Association of Student Employment Services NASES produces helpful information on students and tax.

Note: This content is provided as general background information and should not be taken as legal advice or financial advice for your particular situation. Make sure to get individual advice on your case from your union, a source on our free help page or an independent financial advisor before taking any action.

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