students and tax... just to clarify

[vicky_d]

hi everyone !

just wanted to clear something up... im a student and i usually get myself a job every summer for which i do not normally have to pay tax... this year however i worked over a longer period in the summer, stopped for a while and then continued again part time once i was back at uni... when i started back part time i was paying tax but i think this may be because i exceeded my personal allowance (which is around 4000 no?) and im now well into 6000... but i was under the impression students pay zero tax regardless of how much u get, can anyone clear this up for me ? :chin:

many thanks !

[lucifer devil]

no, otherwise surely people would do a part time degree with a full time job and not pay tax!

as far as i'm aware it's after you earn so much.

[vicky_d]

lol wouldnt that be nice :naughty: tax sucks ! thanks for your help tho

[katralla]

If you study part time- you're not counted as a student for tax purposes! surely full-time student are completely exempt from income tax? If their personal allowance is the same as anyone else's, what's the point in students being able to work tax free- they wouldn't be. Ask your tax office.

[*Snow White Queen*]

You are only exempt from tax in the summer if you don't work throughout the rest of the year.

[katralla]

well, it seems I'm wrong

http://www.hmrc.gov.uk/faqs/general.htm#2

explains about tax allowance for students

[Knee High Stripy Socks]

On a slight tangent, any idea where I would find out about claiming tax back for the last year, now I am at uni?

[*Snow White Queen*]

Here you go dear...http://www.hmrc.gov.uk/payetaxpayers/iwtclaim-a-tax-repayment.shtml

[Knee High Stripy Socks]

Thank you sweetie

[Randomgirl]

You have to pay tax on anything you earn that is over the normal tax-free limit (£4000-and-something).

You may find that you have to pay tax and then claim it back or you may be able to do a form which means you don't have to pay the tax in the first place.

[girl with sharp teeth]

.

[Mac Sami]

The income tax allowance for 2005/06 is £4895.

The bugger is that if you're paid a wage over a short time i.e. a summer job, chances are you'll be hit with stamp contributions (sorry, national insurance), as that's calculated on a weekly basis.

In such a situation, a useful tip, where possible, is to be self employed. For example, I simply invoice my job for my IT work i.e. as if they are a client who have contracted me (as I have previously done similar IT work for different clients), and then self assess for tax. Should I then have to pay NI, it'll be a lower amount (or so I'm told, as it'll be a different class).

That probably doesn't help, or is a load of crap, or even both!

[katralla]

When you become self employed- you must register as such with the IR within a short time period or face a fine. When registered you pay your own NI, usually quarterly by Direct Debit. There are two rates of NI for self-employed, the lower one is £2.10 a week I think- but don't quote me on it. So Mac: you should be paying your NI as you go, not at the end of the year...

[Mac Sami]

When you become self employed- you must register as such with the IR within a short time period or face a fine. When registered you pay your own NI, usually quarterly by Direct Debit. There are two rates of NI for self-employed, the lower one is £2.10 a week I think- but don't quote me on it. So Mac: you should be paying your NI as you go, not at the end of the year...

No; if you complete a CF10 (ex. CF02) form, you are essentially declaring that your earnings (that's money less expenses) will not exceed the current Class 2 small earnings exception (£4,345). So if in a year you do not earn that much, you do not have to pay NI (although you may still voluntary contribute).

If you earn more than £4,345, you are liable to pay the base rate of £2.10 a week.

If you earn more than the income tax allowance, you are then charged on a sliding scale on top of the £2.10

The point I was trying to make was that with Class 1, you pay a percentage of your earnings over £94 a week as NI i.e. it's weekly, whereas with Class 2, it's based on your tax year's earnings.

[lucifer devil]

i hate thinking i've earnt over the amount. where has it all gone? :(

[katralla]

Aha. Thanks Mac- you learn something new every day!