Lori Meadows
Students in the UK who take on part-time jobs during their studies may be required to pay income tax and National Insurance, depending on their income. Foreign students working in the UK are also subject to these rules, although there are some double-taxation agreements in place that may exempt them from paying UK tax on their income. It is important for students to understand the tax rules and keep track of their income to ensure they do not overpay their taxes and to claim refunds if necessary.
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What You'll Learn
Foreign students and tax
Foreign students in the UK usually do not pay UK tax on foreign income or gains, as long as they are used for course fees or living costs. However, if your living costs are more than £15,000 in a tax year (excluding course fees), HM Revenue and Customs (HMRC) may ask you to account for this.
If you are a foreign student with a job in the UK, you will have to pay Income Tax and National Insurance if you earn over a certain amount. This is the same for UK students. You will not pay Income Tax on the first £12,570 you earn during the tax year. This is called your personal allowance. After that, the following applies when calculated monthly:
- For amounts between £1,048.01 - £4,189 per month, you will pay 20% Income Tax
- For amounts between £4,189.01 - £12,500 per month, you will pay 40% Income Tax
- Over £12,500 per month, you will pay 45% Income Tax
If you are a full-time foreign 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 you are a full-time student, only working in the holidays, returning to full-time education after the holidays, and your total income for the year is below the personal allowance.
If you are a foreign student working in the UK, you should check if your country has a double taxation agreement with the UK and consider the implications. Some double taxation agreements mean you do not pay UK tax on your income if you work while studying. If your country does not have an agreement, you will be taxed in the same way as others who come to the UK.
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Working holiday jobs
If you're a student in the UK, you may have to pay tax on your earnings. There are two main types of tax that people pay when working in the UK: Income Tax and National Insurance. The amount you pay depends on how much you earn. You will not pay Income Tax on the first £12,570 you earn during the tax year. This is called your personal allowance. After that, the following applies when calculated monthly:
- For amounts between £1,048.01 - £4,189 per month, you will pay 20% Income Tax
- For amounts between £4,189.01 - £12,500 per month, you will pay 40% Income Tax
- Over £12,500 per month, you will pay 45% Income Tax
If you're a full-time student with a holiday job, you may not need to pay tax through PAYE. If you only work during the holidays, are returning to full-time education after the holiday, and your total income for the year is below the personal allowance, you can ask your employer for a form P38(S). If you have a part-time job during term time, you can't 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 see if you could get a refund.
There are a variety of holiday jobs available for students in the UK. Some examples include:
- Working in catering and hospitality services, providing service to students, staff, and guests
- Working in retail, serving customers, taking orders, cleaning up, stock control, and recycling
- Working as a carer, visiting clients in their homes
- Working in a school, helping to organise and run activities and events
- Working in a bubble tea shop, serving beverages
- Working in a milk shop, serving beverages and food
There are also organisations such as The Working Holiday Club, which provide working holiday placements for young people in the UK and abroad.
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Self-employed students
If you are a self-employed student in the UK, you will need to pay UK tax and National Insurance, just like any other self-employed person. However, as a student, you may only be working during the holidays, and if you are a full-time student returning to education after the holidays, with your total income for the year being below the personal allowance, you may not need to pay tax through PAYE. In this case, you can ask your employer for a form P38(S).
As a self-employed student, you will need to fill in a Self Assessment tax return each tax year, declaring your income and expenses. This is how HM Revenue and Customs (HMRC) will work out how much tax you need to pay. You must register as self-employed within three months of starting work. The tax year runs from April 6 one year to April 5 the next.
The income tax you pay will be the same as someone in a full-time job, but as a self-employed person, you are taxed on your profits, not your total income. To work out your profits, deduct your business expenses from your total income. This is the amount you will pay income tax on. For the year 2021/2022, the standard personal allowance was £12,570. This is how much you can earn before you start paying income tax. However, the personal allowance will change depending on how much you make in a year. For example, if you earned more than £100,000 a year, your personal allowance of £12,570 would reduce by £1 for every £2 of income.
If you normally live and study in the UK but work abroad during the holidays, you will still count as a UK resident for tax purposes for that tax year. You 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 are unable to claim this tax back from the foreign authorities, you will probably be able to claim a deduction or credit in the UK.
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National Insurance
If you are a student in the UK and work alongside your studies, you will have to pay Income Tax and National Insurance if your income exceeds a certain threshold. This applies to both UK and international students.
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 your income exceeds the weekly threshold. You can ask your employer for a form P38(S) if you are a full-time student in the UK, only working during the holidays, and returning to full-time education after the holidays, and your total income for the year is below the personal allowance.
If you work in the UK while studying, you will normally pay UK tax and National Insurance. However, you may be entitled to reclaim the tax you've paid when you leave by filling in a form P85 and sending it to your Tax Office.
If you are self-employed, you will need to fill in a Self Assessment tax return each tax year, declaring your income and expenses. This allows HM Revenue and Customs (HMRC) to work out how much tax you need to pay. You must register as self-employed within three months of starting work.
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Tax refunds
Students in the UK are often entitled to tax refunds if they have paid too much tax on their earnings. This can occur if you have a holiday job or work part-time during term time. If you are a full-time student, you may not need to pay tax through PAYE (Pay As You Earn), but you will still pay National Insurance if you earn over the weekly threshold.
If you think you have overpaid your income tax, you can use the student tax checker to see if you are eligible for a refund. You can also use the UK Government's tax calculator to understand how much tax you should be paying and if you are owed a refund.
If you are an international student, you can claim a tax refund when you leave the UK, but you must discuss your situation with a Visa and International Student Advice team member. They will inform you that your Student visa will be cut short, and you will not be able to return to the UK for the next 12 months once you claim your refund.
If you work for yourself, you are responsible for sorting out your tax and National Insurance. You will need to fill in a Self Assessment tax return each tax year, declaring your income and expenses. This allows HM Revenue and Customs (HMRC) to calculate how much tax you need to pay.
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, you may be able to claim a deduction or credit in the UK.
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Frequently asked questions
It depends on the student's residency status, income level, and whether their home country has a double taxation agreement with the UK. International students working part-time in the UK are subject to certain tax obligations, and generally, students in full-time education who are employed part-time can expect income tax and National Insurance deductions to be automatically taken from their wages.
A double taxation agreement means that students from certain countries do not pay UK tax on their income if they work while studying. If a country does not have such an agreement, then the student must pay tax like everyone else living in the UK.
Everyone is entitled to a personal allowance, which is an amount they can earn before income tax applies. In the UK, you will not pay income tax on the first £12,570 you earn during the tax year. After that, you will pay 20% income tax on monthly earnings between £1,048.01 and £4,189, 40% tax on earnings between £4,189.01 and £12,500, and 45% tax on earnings over £12,500.
Your employer will usually deduct income tax and National Insurance from your wages through Pay As You Earn (PAYE). You can also use the UK Government's tax calculator to understand how much tax you will pay on your earnings.
Foreign students usually do not pay UK tax on foreign income or gains, as long as they are used for course fees or living costs. However, HM Revenue and Customs (HMRC) may ask you to account for your living costs if they exceed £15,000 in a tax year (excluding course fees).
