Savanna Hoffman
Whether or not you pay tax as a student in the UK depends on a few factors. 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 over the weekly threshold. If you have a part-time job during term-time, your employer will deduct tax from your wages before you receive your payment. 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, if their country does not have a double-taxation agreement with the UK, they will have to pay tax like anyone else living in the UK.
Do you pay tax as a student in the UK?
| Characteristics | Values |
|---|---|
| Tax on foreign income for foreign students | Foreign students do not pay UK tax on foreign income or gains if they are used for course fees or living costs. |
| Double-taxation agreements | Some countries have double-taxation agreements with the UK, meaning students from those countries do not pay UK tax on their income if they work while studying. |
| Tax residence status | Students are liable to UK tax and National Insurance contributions in the same way as other UK taxpayers. |
| Student jobs | Students with jobs in the UK will have to pay Income Tax and National Insurance if they earn over a certain amount. |
| Self-employed students | Students who are self-employed must fill in a Self Assessment tax return each tax year. |
| Holiday jobs | Full-time students with holiday jobs may not need to pay tax through PAYE but will still pay National Insurance if they earn more than the weekly threshold. |
| Council Tax | Full-time students may be eligible for discounts or exemptions on their Council Tax bill. |
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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 them.
Some countries have a ''double-taxation agreement'' which means you do not pay UK tax on your income if you work while studying. If your country does not have this agreement, you will have to pay tax in the same way as others who come to live in the UK. You can check if your country has a double-taxation agreement that covers students on the HMRC website.
If you are from outside the EEA and Switzerland, the position varies from country to country. You can consult the UK Council for International Student Affairs to check the position for the country you have come to the UK from.
If you are an international student working in the UK, you will be subject to tax in the same way as UK nationals. You will need to obtain a National Insurance number, which is unique to you and ensures your employer can pay your tax and National Insurance contributions. You can apply for jobs and start work without a National Insurance number, but you will need to apply for one as soon as you find a job.
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Tax residence status
Your UK tax residence status is fundamental in determining how you are taxed in the UK. Since 6 April 2013, there has been a statutory residence test (SRT) in the UK to determine your UK tax residence status. The SRT outlines the rules for UK tax residence, which are set out in law.
The number of days you spend in the UK is important when determining your residence status under the SRT. If you spend fewer than 16 days in the UK in a tax year, you will be considered a non-resident for that year. If you spend 183 days or more in the UK, you will be considered a resident for that year. There are also other factors that can determine your residence status, such as if you own a home in the UK.
Your UK residence status affects whether you need to pay tax in the UK on your foreign income. Non-residents only pay tax on their UK income and do not pay UK tax on their foreign income. Residents normally pay UK tax on all their income, whether it is from the UK or abroad.
Your tax residence status can change from one tax year to the next, so it is important to check your status each year, especially if your situation changes. For example, if you spend a lot of time travelling in and out of the UK, you should keep a diary of where you are each day and whether you are in the UK at midnight. This will help you consider your residence status and self-assess it if necessary.
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National Insurance
If you are a student in the UK, you may or may not have to pay tax depending on your income and whether you are working. There are two main types of tax that people pay when working in the UK: Income Tax and National Insurance.
To work in the UK, you need to obtain a National Insurance number. This is a unique number that ensures your employer can pay your tax and National Insurance contributions and have them correctly recorded against your name. You can start working before receiving your National Insurance number if you can prove you have the legal right to work in the UK. However, you must inform your employer that you have applied for one and provide it to them once you receive it.
If you work in the UK while studying, you will normally pay UK tax and National Insurance. However, you may be entitled to reclaim any tax you have paid when you leave by filling in a form P85 and sending it to your Tax Office.
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Student jobs
If you're a student in the UK, you may want to consider taking on a part-time job to help with your expenses. There are plenty of opportunities available that offer flexible hours and convenient locations near your campus. Here are some things to keep in mind as you search for student jobs in the UK:
Tax Implications for Students with Jobs
It's important to understand the tax implications of working while studying. In the UK, you typically have to pay tax on your earnings. There are two main types of tax: Income Tax and National Insurance. However, everyone has a "personal allowance," which means you don't pay tax on the first £12,570 you earn during the tax year. For monthly earnings between £1,048.01 and £4,189, you'll pay 20% Income Tax. The rate increases to 40% for monthly earnings between £4,189.01 and £12,500, and above £12,500 per month, you'll pay 45% tax. Similarly, there's a threshold for National Insurance; you won't pay any on the first £1,048 you earn per month, which is £9,564 per year if kept consistent. Above that, you'll pay 12% National Insurance.
Additionally, international students should be aware of double-taxation agreements. Foreign students usually don't pay UK tax on foreign income or gains as long as they are used for course fees or living costs. However, some countries have agreements in place that mean you won't pay UK tax on your income while working as a student. Check with HM Revenue and Customs (HMRC) to understand your specific situation.
Finding Student Jobs
There are several ways to find part-time work as a student in the UK:
- On-Campus Jobs: Many universities offer on-campus jobs, such as bar work, IT support, or student facilitator roles. Keep an eye out for job postings within your university.
- Off-Campus Jobs: Websites like StudentJob UK offer a range of part-time, temporary, and internship opportunities specifically for students across the UK.
- University Resources: Universities often have career centres or student employment services that can help you find flexible, student-friendly job opportunities. They may also provide resources for improving your employability, such as CV-building workshops.
- Online Communities: Online communities like Reddit's r/UniUK often have discussions about part-time job opportunities for students, where you can get insights from other students.
Examples of Student Jobs
- Student ambassador for open days at your university
- Security guarding (long shifts, but you can study on the job)
- Bar work
- IT support
- Internships through career centres
Remember to balance your work and study commitments effectively, and always ensure you understand your tax obligations when taking on employment.
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Tax exemptions and deductions
In the UK, students are generally liable to pay taxes and National Insurance contributions in the same way as other taxpayers. However, there are certain tax exemptions and deductions available for students, which can help reduce their tax burden.
Council Tax Exemption for Full-Time Students
Full-time students are exempt from paying Council Tax. If everyone in a household is a full-time student, they are exempt from paying Council Tax. Even if there is someone in the household who is not a full-time student, the household may still qualify for a discount.
Personal Allowance
Individuals, including students, do not pay Income Tax on the first £12,570 they earn during the tax year. This is known as the Personal Allowance. Income earned above this threshold is taxed at different rates depending on the amount.
National Insurance Contributions
Similar to Income Tax, there is a threshold for National Insurance contributions. Individuals do not pay National Insurance on the first £1,048 they earn per month, which equates to £9,564 per year. Above this threshold, National Insurance contributions are calculated at 12%.
Double Taxation Agreements
Some countries have double taxation agreements with the UK, which means that students from those countries may not have to pay UK tax on income or gains from foreign sources if they are used for course fees, living costs, or other purposes specified in the agreement. These agreements can vary in their specifics, so it is important to refer to the relevant agreement.
Tax Residence and Domicile Status
Understanding your tax residence and domicile status is crucial in determining your tax liabilities in the UK. Non-domiciled residents may have different tax obligations than ordinary residents.
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Frequently asked questions
Students are generally liable to pay UK tax and National Insurance contributions if they are working, in the same way as other UK taxpayers. However, you only pay tax if you earn above a certain amount, which is £12,570 per year.
Foreign students do not pay UK tax on foreign income or gains, as long as they are being used for course fees or living costs. However, if their living costs are over £15,000 per year, HM Revenue and Customs (HMRC) may ask for an account of their spending.
Students may be exempt from paying tax on scholarships or bursaries under UK domestic law. However, this depends on the specific circumstances and the student should check their status.
If you are a student with a part-time job, your employer will usually deduct Income Tax and National Insurance contributions from your wages through Pay As You Earn (PAYE). If you stop working partway through the tax year, you may be able to claim a refund.
You can use the UK Government's tax calculator to find out how much tax you need to pay on your earnings.
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