Tax + U

Contents

Student loans

Repaying the loan

Most of the time, this happens automatically.

If you get a job that pays over £15,000 each year, repayments are taken out of your wages at the same time as your tax and National Insurance (either each month or each week). The Student Loans Company (SLC) will let you know about this before it happens, and if you earn less than £15,000, you won't pay anything.

Repayments don't start until the beginning of the tax year (6 April) after your course has ended. Your employer will take care of the paperwork, and you will only pay 9 per cent of any money you earn above the £15,000 threshold.

Interest rates

Like all loans, there is some interest on a student loan. However, it's lower than the rate you would normally pay to a bank or building society.

Voluntary payments

There is also a way to pay your loan off even quicker, as well as having repayments deducted by your employer. You can make voluntary repayments of any amount of £5.00 or more direct to the SLC yourself, at any time, even if you do not earn above the threshold.

You can do this by sending a cheque to SLC, telling them your name and student reference number. If you do choose to make voluntary payments it will not stop your employer making deductions from your pay for the balance of your loan, but your employer will stop making deductions sooner.

Being self-employed

If you work for yourself, you obviously won't have an employer to do the paperwork for you. However, you will normally fill in an annual tax return (declaring your profits and expenses) and this means that HM Revenue & Customs (HMRC) can work out how much your repayments will be.

Working abroad

If you work abroad, HMRC won't be able to take student loan repayments out of your wages. Instead, you will need to make the repayments straight to the SLC itself.

Students at work

Paying your taxes

If you work for someone else, your tax and National Insurance will be paid automatically. It comes straight out of your wages before you even receive them. This is known as PAYE (Pay As You Earn).

But you don't have to pay tax on everything. Everybody can earn a certain amount (known as the Personal Allowance) before they start paying tax or National Insurance. At the moment, the Personal Allowance is £6,035 .

Rate you normally pay:

  • 20 per cent on anything you earn between £1 and £34,800 (basic rate)
  • 40 per cent on anything above £34,801 (higher rate)
  • Working while you study: paying tax on the Directgov website

Paying your National Insurance

If you’re employed National Insurance is currently 11 per cent, on earnings between £105.01 and £770 a week and then 1 per cent after that, but it doesn't start until you earn at least £105.01 a week.

Being self-employed

If you work for yourself, you obviously won't have an employer to sort out tax and National Insurance for you. However, you will normally fill in an annual tax return (declaring your profits and expenses) and this allows HMRC to work out how much you need to pay.

Paying National Insurance

If you’re self employed you'll normally pay:

  • a weekly amount - currently set at £2.30
  • once they are above £5,435

Remember: You need to register as self-employed within three months of starting work. You can use the Starting in business page or Tel 0845 915 4515.

Holiday jobs

If you only work during the holidays, and you expect to earn no more than £6,035 in the tax year ending 5 April, just ask your employer for a Form P38(S) (PDF 94K). Fill this in and you won't have any tax taken out of your wages.

If you already have a part-time job during term time, you won't be able to use this form just for your holiday job. You will already be 'on the system', so your employer will take care of the paperwork to make sure you don't pay too much tax.

Minimum wage

There is a national minimum wage to make sure that employees receive fair pay for their time, even if they are students for most of the year.

Currently, the minimum wage is:

For more information you can call the helpline on 0845 600 0678. The lines are open 8.00 am to 6.00 pm Monday to Friday.

You should call the helpline if your employer is not paying you the National Minimum Wage. All calls to the helpline will be treated as confidential. You do not even have to give your name.

Leaving your job

When you leave a job, your employer will give you a Form P45. You will need to keep this safe and give it to your next employer (just to make sure you don't pay too much tax in the future).

With a few exceptions, such as an ISA (Individual Savings Accounts) savings interest is normally taxed automatically (at 20 per cent). However, if you expect to earn less than £6,035 during the tax year ending 5 April, you can stop this happening by filling in Form R85 (PDF 34K) and giving it to your bank or building society.

Banks and building societies normally give you a Form R85 when you open an account.

Working abroad

Paying your taxes

Normally, if you work abroad you are still treated as a tax resident of the UK. This basically means you will pay UK tax on anything you earn overseas. However, it also means you get the same tax allowances that you would receive in this country.

If your overseas employer taxes you as well (and you aren't able to claim it back directly from the foreign authorities), you will be credited for this in the UK.

Important: If you are already working in the UK, you will need to fill in Form P85 (PDF 374K) and send it to your Tax Office. This is to let HMRC know that you are going to be out of the country, and it may help in the future if you have any problems with foreign tax. If you are not already working, there is no need to fill in this form.

Student loans

If you work abroad, HMRC won't be able to take student loan repayments out of your wages automatically. Instead, you will need to make the repayments straight to the SLC itself.

Foreign students working in the UK

To make sure you are able to work in the UK, simply contact:

The Home Office
Block C, Whitgift Centre
Croydon
CR9 1AT

Tel 0870 606 7766

If you work in the UK while studying, you will normally pay UK tax and National Insurance. You may be entitled to reclaim any tax you pay by filling in Form P85 and sending it to your Tax Office (your employer will have all the details).

Being a parent

Help with your income

If you are a student parent, you can receive help with your income by getting tax credits paid directly into your bank account.

Child Tax Credit: This is available for parents with a household income below £55,220. The amount you receive depends on the number of children you have, their ages and whether or not they have any disabilities.

Working Tax Credit: If you are a student parent regularly working more than 16 hours a week, this may help you top up a low income. You may also get help with childcare (if you are using a registered child minder).

Claiming (checking your income)

Your current income can affect your claim, so it's worth making a note of it in advance.

Income that may affect your claim:

  • wages (from employment or self-employment)
  • Social Security benefits
  • bank and building society interest

Income that doesn't affect your claim:

  • student loans and grants (including those for childcare)

Special note for student nurses

Student nurses, or any health profession trainees, may receive NHS (National Health Service) bursaries. You do not need to tell us about these if you are making a claim for tax credits.

Child Benefit

Whether or not you receive tax credits or any other support, you will still receive Child Benefit. This is a monthly payment for each child you have, and it isn't affected by income or savings.