Finding student life taxing?

How much income tax should I be paying?

There is no specific student tax code so money earned up to the value of £36,000 in the coming financial year will be taxed at 20% for income tax.

You are allowed to earn up to £5,435 in the year April 2008 to April 2009 without being taxed a penny.

If you have more than one job, the personal allowance can only be applied to one and you will be taxed the full 20% on any other earnings.

How about National Insurance Contributions (NICs)?

By paying NICs, you are entitling yourself to certain social security benefits such as a state pension.

From April 2008 you are allowed to earn up to £105 per week or £453 per month without being relieved of 11% of your earnings for NICs.

It is not uncommon for students to have paid too much tax as they often work only during the holidays and therefore don't reach the taxable threshold during the year.

Sophie Kay

For most students working part-time, this is not normally relevant but if your earnings are over the threshold, your employer will deduct the NICs for you.

Help! I think I've paid too much tax!

It is not uncommon for students to have paid too much tax as they often work only during the holidays and therefore don't reach the taxable threshold of £5,435 during the year.

If you find that you have paid too much tax you are eligible to claim a tax refund. For this you must have both a P60 form and a P45 form.

The P60 form summarises your earnings and how much tax you have paid over the whole year while the P45 summarises how much you earned from a specific job.

Student Tax Advice has a calculator which will help determine whether you have paid too much tax.

If you discover that you have paid too much tax, you can get a tax rebate form from the Inland Revenue. Have a look at the Tax Fix website for some useful advice.

The tax rules applicable to students really aren't as confusing as they perhaps initially seem though it is definitely worth checking your paychecks and making sure that your tax forms are in order.

Invest in a ring binder for exactly this purpose and throw everything related to tax and employment in there - it takes a minute a month but might earn you a hefty wedge once a year.