Lana Oconnell
Students who work while studying may need to pay income tax and National Insurance, which are usually deducted from their wages through PAYE (Pay As You Earn). However, students often end up paying more tax than they need to, and they can claim refunds for overpaid taxes. Students can use tools like the student tax checker or a tax calculator to determine if they are eligible for a refund. They can then claim the refund online or by contacting HMRC and providing relevant information such as their employer's PAYE reference number and taxable income details. In some cases, students may also be able to claim tax credits and benefits, such as the American Opportunity Tax Credit (AOTC) or the Earned Income Tax Credit (EITC), to get money back when filing their taxes.
Can students claim back PAYE?
| Characteristics | Values |
|---|---|
| Full-time students with a holiday job | May not need to pay tax through PAYE but will still pay National Insurance if they earn more than the weekly threshold |
| Full-time student status | Must be a full-time student in the UK, only working during the holidays, and returning to full-time education after the holidays |
| Total income | Total income for the year must be below the personal allowance |
| Part-time job during term time | Form P38(S) cannot be used; employer will handle the paperwork to ensure student doesn't pay too much tax |
| Self-employed | Student must handle their own tax and National Insurance |
| Overpaid tax | Students can claim back overpaid tax |
| Online claim | Online claim can be made with the employer's PAYE reference number and details of taxable income |
| Phone claim | Phone claim can be made by calling HMRC and providing National Insurance Number, details of income, and P45 |
| Tax code | Being on the wrong tax code can result in paying too much tax |
| P60 form | Provided by employer at the end of the tax year, showing how much tax has been paid |
| P45 form | Provided by employer when leaving a job, showing how much tax has been paid for that tax year |
| National Insurance | Students can claim back overpaid National Insurance contributions |
| Self-employed and National Insurance | Self-employed students must complete a self-assessment tax return for National Insurance |
| Tax benefits | Students enrolled in higher education are eligible for tax credits and benefits |
| Educational credits | Students can unlock educational credits to get money back, such as the American Opportunity Tax Credit (AOTC) |
| Tax software | Tax filing software such as H&R Block and TurboTax can help claim education credits |
| In-person assistance | Volunteer Income Tax Assistance (VITA) locations offer free in-person help for those making less than $60,000 per year |
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What You'll Learn
Students working while studying
Students who work while studying may need to pay income tax and National Insurance, depending on how much they earn. This is known as Pay As You Earn (PAYE), and it means that tax is deducted from your wages before you receive them. Students in the UK can earn a certain amount before they start paying income tax, known as the personal allowance. For the 2025/26 tax year, the threshold for paying National Insurance is £242 per week or £12,570 per year.
If you are a full-time student with a holiday job, you may not need to pay tax through PAYE, but you will still pay National Insurance if you earn above the weekly threshold. You can ask your employer for a form P38(S) if you are a full-time student, only working during the holidays, returning to full-time education after the holidays, and your total income for the year is below the personal allowance. If you have a part-time job during term time, you cannot use form P38(S) just for your holiday job. Your employer will ensure you do not pay too much tax.
If you work in the UK while studying, you will normally pay UK tax and National Insurance. This also applies if you normally live and study in the UK but work abroad during the holidays, as you will still count as a UK resident for tax purposes. If you work abroad for a UK employer, you will be required to pay National Insurance while you are abroad. If you work abroad for a foreign employer, you will not normally pay UK National Insurance, but you may have to pay foreign contributions, which can sometimes count towards UK Social Security benefits.
If you think you have overpaid your tax, you can check if you are eligible for a student tax refund. You can claim online if you have your employer's PAYE reference number and the details of your taxable income for that tax year. Otherwise, you can call HMRC and explain why you think you have overpaid, making sure you have your National Insurance Number, income details, and P45 form to hand. You can also use your P45 form to work out if you have paid too much tax. When you leave a job, your employer will give you a P60 form, which shows you how much tax you have paid that tax year. This can help you determine if you are owed a refund.
Students enrolled in higher education may be eligible for tax credits and benefits, which can lower the taxes they pay and often get refunded directly to their bank accounts. For example, the American Opportunity Tax Credit (AOTC) could give a US citizen or resident enrolled in college up to $2,500 each year, which can help pay for tuition, food, housing, healthcare, and more. A student who works part-time or full-time but earns less than $63,400 per year could qualify for the Earned Income Tax Credit (EITC) of nearly $4,000 to subsidize their income.
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Holiday jobs
Students with holiday jobs in the UK must pay income tax on a Pay As You Earn (PAYE) basis. This means that employers will deduct income tax and national insurance from the student's wages. If a student earns less than £11,850, including any term-time work added to their summer earnings during the tax year, they will be able to claim this back the following April.
Previously, Her Majesty's Revenue & Customs (HMRC) required students to complete a declaration advising them and their employer that they were in full-time education and would not exceed their personal allowance over the course of the tax year. As a result, employers were not mandated to deduct tax. However, with the introduction of real-time tax reporting, this system was abolished. Now, if a student earns more than £987 per month on average, they must pay income tax, and if they earn more than £162 per week, they must pay national insurance.
Students who have paid tax and stopped working partway through the tax year may be able to claim a refund by contacting HMRC and potentially setting up a personal tax account. It is important to note that holiday pay rules differ based on whether an employee has 'normal working hours' under their contract. For those paid monthly, one must calculate their average hourly pay for the last month and then multiply this by the number of hours worked in a week to determine their weekly pay.
Additionally, most workers are entitled to 5.6 weeks of paid holiday per year, which can be calculated using a holiday calculator. This includes full-time, part-time, term-time, and casual workers. The 'normal' rate of pay includes commission, regular overtime payments, and any payments related to length of service or professional qualifications. It does not typically include bonus payments. For regular-hours workers, employers cannot include an amount for holiday pay in the hourly rate, but they can do so for irregular-hours and part-year workers.
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Working abroad
If you are a student earning an income, you will have to pay Income Tax and National Insurance if your earnings exceed a certain amount. This applies even if you work abroad during your holidays. If you are a foreign student working in the UK, you will also have to pay Income Tax and National Insurance.
If you are a UK resident who works abroad, you will still be liable for UK tax on anything you earn abroad above the personal allowance. However, if your overseas employer also taxes you and you are unable to claim tax back from the foreign authorities, you will probably be able to claim a deduction or credit in the UK.
If you are an international student working part-time in the UK, you are subject to certain tax obligations, depending on your residency status and income level. Generally, income tax and National Insurance deductions will be automatically deducted from your wages before you receive them. This is known as Pay As You Earn (PAYE). Everyone is entitled to a personal allowance, which is an amount they can earn before income tax is applied. If your average monthly earnings as an international student exceed £1,048, you are required to pay income tax. Similarly, if your weekly earnings surpass £242, National Insurance contributions become mandatory.
If you are a UK employer and your employee works in a country that the UK has a social security agreement with, they will usually pay social security contributions in that country instead of UK National Insurance contributions. If you are an employer and your employee works abroad, you must continue to calculate and deduct PAYE tax from all payments made to them.
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Self-employed students
As a self-employed student, you will need to register as self-employed and fill in a Self-Assessment tax return each tax year. This allows HM Revenue and Customs (HMRC) to calculate how much tax you need to pay. You must register as self-employed within three months of starting work by calling the Newly Self-Employed helpline.
When filling in your Self-Assessment tax return, you can check a box to indicate that you have a student loan. HMRC will then determine how much of your loan you need to pay. Your repayment amount will be the same regardless of your employment status, and it will be automatically deducted from your income, just like income tax and National Insurance.
If you took out your loan in England or Wales before 1 September 2012, you will repay your loan under HMRC's Plan 1. Under this plan, you will start repaying your loan once your annual earnings exceed £19,895, with the amount being 9% of anything over that threshold. If you took out your loan after this date, you will be under Plan 2 and will start repaying once your annual earnings exceed £27,295, with the same 9% rule applying.
It is important to submit your Self-Assessment tax return by 31 January each year to avoid fines or penalties. You can also get help from charities such as StepChange and the Debt Advice Foundation if you need advice on studying with debts.
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Tax codes
If you're a student with a job in the UK, you may have to pay Income Tax and National Insurance. This depends on how much you earn and whether you work during term-time or the holidays. If you work for an employer, they will deduct any Income Tax and National Insurance you owe from your wages before you receive them. This is known as Pay As You Earn (PAYE).
Your tax code will be on your payslip and is used by HMRC to categorise your taxable income to ensure you are taxed correctly. Everyone's tax code is different, as everyone has a separate income, various benefits, different debts, and different pensions. Each tax code typically starts with a number and ends with a letter. The letter in the code defines the nature of your income. For example, the most common letter is 'L', which applies to most people who have just one job, be it full time or part-time. The numbers define your tax-free allowance. So, if your tax code is 1257L, your personal allowance is £12,570 for the tax year.
If you are a full-time student with a holiday job, you may not need to pay tax through PAYE, but you will still pay National Insurance if you earn more than the weekly threshold. You can ask your employer for a form P38(S) if the following apply: you're a full-time student in the UK, only working in the holidays; you're returning to full-time education after the holidays; and your total income for the year is below the personal allowance. If you have a part-time job during term time, you cannot use form P38(S) just for your holiday job. Your employer will take care of the paperwork to make sure you don't pay too much tax. If you think you've overpaid your income tax, you can use the student tax checker to find out if you could be due a refund.
If you work abroad during the holidays, you will still count as a UK resident for tax purposes and will be liable for UK tax on anything you earn abroad above the personal allowance. However, if your overseas employer also taxes you, and you aren't able to claim tax back directly from the foreign authorities, you'll probably be able to claim a deduction or credit in the UK. Ask your Tax Office for details if this applies to you.
There are also specific tax codes for income earned in New Zealand, such as the NSW tax code for recognised seasonal workers or foreign crew of a vessel fishing in New Zealand waters.
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Frequently asked questions
Students can claim back overpaid tax from PAYE (Pay As You Earn). Students can check online if they are eligible for a student tax refund and claim online using their employer's PAYE reference number.
Students can use a P45 form to calculate if they have overpaid tax. They can also use a tax calculator.
Students can claim their overpaid tax online or call HMRC and explain why they think they have overpaid. They will need their National Insurance Number, details of their income, and their P45 form.
Students enrolled in higher education are often eligible for money in tax credits and benefits. For example, the American Opportunity Tax Credit (AOTC) could give a U.S. citizen or resident enrolled in college up to $2,500 each year.
