Employers taking on UK students for short-term holiday jobs this summer will be required to deduct income tax and national insurance from their wages through Pay As You Earn following a little-known change to the tax rules.
People in temporary jobs will now be taxed in the same way as any other worker if they earn more than £987 (US$1,295) in a single month, tax advisers have warned, even if they earn less than the £11,850 (US$15,552) personal threshold over the year. They would then need to claim the tax back.
Yadvinder Rihal, employment taxes manager at Blick Rothenberg, told The Guardian: "When a student is employed over the holiday period – even though they are in full-time education – there are now no special procedures. Employers must treat them in exactly the same way as any other employee, including their eligibility for pensions auto-enrolment."
Her Majesty’s Revenue & Customs (HMRC) previously required students to complete a declaration advising it, 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 required to deduct tax.
"With the introduction of real-time tax reporting, this old system was abolished," Rihal said. "It means if you have a job when you’re a student, you have to pay income tax if you earn more than £987 a month on average – this is your personal allowance – and national insurance if you earn more than £162 (US$213) a week.”
As a result, employers will be required to deduct income tax and national insurance from the student’s wages through Pay As You Earn, he added.
A student earning £8 (US$10.50) an hour and working a 35-hour week would exceed the threshold if they worked for a full month, which means they would be taxed, albeit not very much. Any student earning less than £11,850 – once any term-time work is added to their summer earnings – during the tax year, will be entitled to claim it back the following April.
"If you’ve paid tax and stopped working part way through the tax year, you may be able to claim a refund by contacting HMRC," said Rihal. "HMRC may require you to set up a personal tax account in order to process the refund. This can be done online."
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
Employers taking on UK students for short-term holiday jobs this summer will be required to deduct income tax and national insurance from their wages through Pay As You Earn following a little-known change to the tax rules.
People in temporary jobs will now be taxed in the same way as any other worker if they earn more than £987 (US$1,295) in a single month, tax advisers have warned, even if they earn less than the £11,850 (US$15,552) personal threshold over the year. They would then need to claim the tax back.
Yadvinder Rihal, employment taxes manager at Blick Rothenberg, told The Guardian: "When a student is employed over the holiday period – even though they are in full-time education – there are now no special procedures. Employers must treat them in exactly the same way as any other employee, including their eligibility for pensions auto-enrolment."
Her Majesty’s Revenue & Customs (HMRC) previously required students to complete a declaration advising it, 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 required to deduct tax.
"With the introduction of real-time tax reporting, this old system was abolished," Rihal said. "It means if you have a job when you’re a student, you have to pay income tax if you earn more than £987 a month on average – this is your personal allowance – and national insurance if you earn more than £162 (US$213) a week.”
As a result, employers will be required to deduct income tax and national insurance from the student’s wages through Pay As You Earn, he added.
A student earning £8 (US$10.50) an hour and working a 35-hour week would exceed the threshold if they worked for a full month, which means they would be taxed, albeit not very much. Any student earning less than £11,850 – once any term-time work is added to their summer earnings – during the tax year, will be entitled to claim it back the following April.
"If you’ve paid tax and stopped working part way through the tax year, you may be able to claim a refund by contacting HMRC," said Rihal. "HMRC may require you to set up a personal tax account in order to process the refund. This can be done online."
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
