Students: working in the holidays

If you're a student your employer will operate PAYE (Pay as You Earn) to deduct Income Tax and National Insurance from your wages.

Income Tax

Nearly everyone in the UK is entitled to an Income Tax Personal Allowance. This is the amount of income you can earn or receive each year before paying tax. A new tax year begins every 6 April and finishes on 5 April the next year.

The Personal Allowance for the 2014 to 2015 tax year is £10,000.

Normally under the PAYE system your Personal Allowance is divided by the total number of pay days you will have in the tax year. So if you are paid:

  • monthly the allowance is divided by 12 (£10,000 divided by 12 months = £833 a month)
  • weekly the allowance is divided by 52 (£10,000 divided by 52 weeks = £192 a week)

If you are paid monthly your employer will not deduct tax from the first £833 you earn each month. If you are paid weekly your employer will not deduct tax from the first £192 you earn each week.

If you stop work part way through the year you may be due a refund of tax.

Starter Checklist

If you start work your employer may give you a Starter Checklist to complete, or ask you relevant information before your first pay day to tell HM Revenue & Customs (HMRC) about you. This will help your employer allocate a tax code and work out the tax due when you are paid. HMRC will process the information you have provided on the Starter Checklist and where necessary, revise the tax code. It's important that you complete the Starter Checklist or provide the relevant information your employer has asked for as soon as possible before your first pay day, so your employer knows what tax code to use. If you don't you could end up paying the wrong amount of tax. You can also complete a print a copy of the Starter Checklist by following the link below. Give it to your employer; do not send the checklist to HMRC.

Starter Checklist - to gather information about new employees

National Insurance contributions

If you are employed you will pay Class 1 National Insurance contributions if your pay is above a certain amount.

The amount you will pay in the 2014 to 2015 tax year is:

  • nothing on pay up to £153 a week
  • 12% of the amount you earn between £153 and £805
  • 2% of all your earnings over £805 a week

More Useful links

Reclaiming tax if you've overpaid through your job

Ways you pay Income Tax

Personal Allowance

Income Tax rates and allowances

National Insurance Contributions rates and allowances