With the new term starting for students in the coming weeks many will soon be leaving their summer jobs.
It’s common for students who work temporary jobs to overpay tax often because they have an incorrect tax code.
The low income tax reforms group or LITRG has this summer sent out a message to working students who have been paying tax to check their tax code.
If you earn enough to pay tax as a student and the tax code your employer uses is correct you wouldn’t normally pay too much.
In reality the PAYE system that collects income tax from employed individuals can sometimes deduct too much which is why the LITRG is recommending that working students check their tax position.
Switching between temporary jobs and having more than one employer in a tax year are typical reasons to overpay tax and a common work pattern for many working students.
It’s not just the current year you can check with the previous four tax years being open for review with the potential for any overpaid income tax to be refunded.
How can I check my student tax code?
You can find the tax code that your current employer is using on your payslips. The tax code HMRC has issued can be found by using your personal tax account or the HMRC app.
If you haven’t already opened a personal tax account or downloaded the HMRC app it is recommended to do so because they are useful tools that you may need throughout your financial life.
The standard tax code for the 24/25 tax year is 1257L which means you are allowed to earn a tax free income of up to £12,570 in that tax year which runs from April 6 2024 up to the 5 April 2025.
How can I claim a student tax rebate?
Claiming a tax rebate during the current tax year is called an in year repayment.
HMRC has a process that you can follow through using their income tax checker for the current tax year online, or via your personal tax account, or you can call HMRC on their tax helpline (be prepared to wait in a que).
If you don’t expect to work again in the current tax year the HMRC form P50 can also be used in specific circumstances.
The PAYE system usually reconciles your tax record automatically after the end of each tax year so for previous years any overpaid tax should be repaid to you without having to ask.
This is not always the case which is why it is always worth checking your own tax records.
Keep your tax related paperwork
For reference purposes it’s always a good idea to keep paperwork that your employer gives you like payslips, a P45 form if you leave a job or, a P60 which you get if you are employed up to the end of a tax year.
It’s recommended to keep your tax related records for a minimum of six tax years and storing them digitally is a handy backup plan for the inevitable “I’v lost it when moving” scenario…
Moving in between temporary jobs is a common work pattern for students and that means getting used to the HMRC form P45.
A P45 is used by employers and HMRC to help keep your tax record up to date so you don’t overpay or underpay tax.
So when you are searching for your next job you should make sure you have your last P45 part 1A available so you can give it to your new employer straightaway.
If you don’t have a P45 when you begin a new job you should ask your employer for a new starter checklist which can be used to instead.
Students and the self employed trading allowance
The self employed trading allowance covers income from side gigs like selling items on ebay or Amazon up to the value of £1,000 in any one tax year.
Students can potentially earn income up to the £1,000 trading allowance threshold tax free and not have to declare it to HMRC on a self assessment tax return (which you would normally have to if you had income from self employment).
