Saturday, 28 May 2016

Students And Taxes

Using music as our guide, two songs which seem appropriate at this time of year are 'School's out' by Alice Cooper and 'Get a Job' by the Offspring because that is exactly what many students will be doing until the doors creak open again on a shiny new term in September.
What that means is that as students are earning they will rub up against the scary Taxman, a prospect that many are wholly unprepared for.
The biggest myth is that as a student, you are exempt from paying tax but as you may soon find out, anybody who earns over £11,000 (approx £917 a month or £211 a week) will pay tax regardless if that person is a student.
When you start your summer job you will be given a tax code and although tax codes differ from person to person depending on their circumstances, the usual one for this year is 1100L so if your payslip shows something like BR or 0T you are paying 'emergency tax' but a phone call or email to HMRC will get you on the correct code and paying the correct amount of tax (or none at all if you are below the threshold amounts as above).
If you are on the wrong code and paying emergency tax then you can get that back through your next pay as HMRC will change your code and do it so that the tax overpaid will be repaid when the new code is next operated, you don't have to wait until the end of the tax year.
Finally, as well as Income Tax you will pay National Insurance if you earn above £155 per week (£671 per month) which is 12% which goes towards your state pension or any welfare benefits that you may have to claim later. 
Enjoy the summer, don't work too hard and don't worry about saving just yet, go spend your hard earned money on bacardi breezers, concerts and enjoying life before you have to do it for real.


Keep Life Simple said...

I would say to socialize more of the economy, hire more government workers and really enjoy working so that you can pay the tax woman.

Falling on a bruise said...

The UK Government just got a rollicking for getting rid of too many Government workers so they have having to take more back on so you do have have a point.

Keep Life Simple said...

Hey, I say socialize the whole economy. Fewer competitors for US companies.