[Illusionary]

Over the past few days, I've been working on a full re-write of the TSR Wiki article on Income Tax and National Insurance for students. This re-write is now complete (or as complete as a Wiki article ever can be!), and the guide attempts to cover all of the common issues that have come up in the previous Tax sticky in this forum. Hopefully this will now be a useful resource to any members who have questions about how these taxes affect them. I've arranged that this thread will now replace the previous sticky in Money & Finance.

So, time for the links:

• Wiki article on Income Tax and National Insurance
• The old tax thread

This thread is intended to be a place for anyone to ask any questions that they have about tax issues and hopefully get them answered. If there's anything that seems particularly important, I'll try to get around to adding this to the Wiki article as well.

I won't reproduce the whole article in this post, but I will bring up two very important issues:

• First of all, being a student has no effect on whether you should be paying Income Tax.
• If you just want to know how much tax you should be paying for a given income, there's an excellent calculator at www.listentotaxman.com

Direct links to each major section of the Wiki article are in the expand box below:

Income Tax and National Insurance - Table of contents

1. The basics
2. Reclaiming overpaid tax
3. Common problems and scenarios
4. Self-employment
5. Forms
6. Useful links

If anyone has any suggestions for further topics that they'd like to be addressed by the article, let me know and I'll see what I can do. I realise that the nature of the Wiki means that anyone can edit it, but I've spent a considerable amount of time re-writing this article so I'd ask that anyone considering making any further non-minor changes let me know before doing so.

Now, if anyone has any further questions, fire away!

[Clubber Lang]

Its very well written actually - cannot think of anything to add.

Think you now just need a detail sticky on student loans

[fahadk786]

hello ppl

im still working and havent left my job and just wnna know how can i claim my tax back as ive been taxed to much.

thnx

[Illusionary]

(Original post by fahadk786)
hello ppl

im still working and havent left my job and just wnna know how can i claim my tax back as ive been taxed to much.

thnx

Try taking a look here: http://www.thestudentroom.co.uk/wiki...g_overpaid_tax

If there's anything unclear after you've read that, feel free to ask.

[Bravery]

wait for for your p45 to come through then just call your local tax office and say you want to claim it back, they will take care of the rest, should come through within a week or two.

[nearlyheadlessian]

(Original post by
Illusionary)
x

It's a great article. A couple of points you might consider adding to the section regarding self-employment (I know you want to keep it brief but I feel the couple of points I'm suggesting are relevant to a certain line of self-employed work that some students are involved in) are that once you commence work as self-employed you have three months to inform HMRC otherwise you're subject to a penalty. Additionally, if you're likely to earn less than about £4.8k (I forget the exact figure) you can apply for a certificate of small earnings which exempts you from NI payments in relation to the self-employment. It may also be worth adding, that depending on what it is you do as self-employed, there is no harm in keeping decent accounts and receipts and so on, to make the tax return that little bit easier.

[Illusionary]

(Original post by nearlyheadlessian)
It's a great article. A couple of points you might consider adding to the section regarding self-employment (I know you want to keep it brief but I feel the couple of points I'm suggesting are relevant to a certain line of self-employed work that some students are involved in) are that once you commence work as self-employed you have three months to inform HMRC otherwise you're subject to a penalty. Additionally, if you're likely to earn less than about £4.8k (I forget the exact figure) you can apply for a certificate of small earnings which exempts you from NI payments in relation to the self-employment. It may also be worth adding, that depending on what it is you do as self-employed, there is no harm in keeping decent accounts and receipts and so on, to make the tax return that little bit easier.

Good suggestions, thanks!

I'll see what I can do about making some updates in the next couple of days.

[so_crunchy]

Hello,

Last year as part of my course i had a placement year. As i started in August 2008 and finished in August 2009 without having any previous employment or employment afterwards i have only worked half the tax year twice. Am i entitled to some of my tax money back? And how do i go about doing it? Is it best for me to ask for the August 2008 - April 2009 money first adn then when its April 2010 to claim back the rest?

Thanks for any help advance.

Not entirely sure how i do this but people keep telling me i should get a lot of money back.

[nearlyheadlessian]

That depends. How much did you earn?

[Illusionary]

(Original post by so_crunchy)
Hello,

Last year as part of my course i had a placement year. As i started in August 2008 and finished in August 2009 without having any previous employment or employment afterwards i have only worked half the tax year twice. Am i entitled to some of my tax money back? And how do i go about doing it? Is it best for me to ask for the August 2008 - April 2009 money first adn then when its April 2010 to claim back the rest?

Thanks for any help advance.

Not entirely sure how i do this but people keep telling me i should get a lot of money back.

Your need to treat each 'tax year' (ending on 5 April each year) separately. First, please could you check your payslips for the year ended 5 April 2009 to see what tax code you were on. If the code is "603L" then most likely you've paid the correct amount of tax for the year and won't be entitled to any further refund. If it wasn't "603L" (it may have been "BR", for example), then you may be entitled to a refund. You can request this by writing to your tax office (see below for the address) enclosing a copy of the form P60 that your employer should have issued to you following the end of the tax year.

Now, for the current tax year (ended 5 April 2010) you're quite likely to be entitled to at least a partial refund if you have paid any Income Tax, as you won't have received the benefit of your full annual personal allowance (currently £6,375) by the time you left the job. In this case, you can claim any refund to which you may be entitled by completing a form P50 (clicky) and returning this to your tax office (contact details here). You'll need to enclose a copy of the form P45 that you should have received from your employer after leaving the job.

Feel free to ask if anything's unclear, but I'd also point you in the direction of the new TSR guide to Income Tax and National Insurance, which I've recently re-written. You can find it here.

[so_crunchy]

Illusionary


Thanks for responding. You were very helpful and helped to clear things up for me. I'm grateful for the time and effort you put into your response. Couple of questions on your comments:

(Original post by Illusionary)
Your need to treat each 'tax year' (ending on 5 April each year) separately. First, please could you check your payslips for the year ended 5 April 2009 to see what tax code you were on. If the code is "603L" then most likely you've paid the correct amount of tax for the year and won't be entitled to any further refund. If it wasn't "603L" (it may have been "BR", for example), then you may be entitled to a refund. You can request this by writing to your tax office (see below for the address) enclosing a copy of the form P60 that your employer should have issued to you following the end of the tax year.

My final tax code on my P60 is 603L as you state above. I earnt £8705 and the total tax deducted was £533 for this year. Does this appear coorect to you? Is it worth me adding a copy of the p60 and asking them to review that it is correct or just to leave it?

(Original post by Illusionary)
Now, for the current tax year (ended 5 April 2010) you're quite likely to be entitled to at least a partial refund if you have paid any Income Tax, as you won't have received the benefit of your full annual personal allowance (currently £6,375) by the time you left the job. In this case, you can claim any refund to which you may be entitled by completing a form P50 (clicky) and returning this to your tax office (contact details here). You'll need to enclose a copy of the form P45 that you should have received from your employer after leaving the job.
/wiki/National_Insurance_and_Income_Ta x"]here[/url].

I earnt £6833 in this year. Paying £826 tax. I will send off one of these P50 forms. Two small questions: 1) How much tax do you think i will get back? 2) How long does it take them to process this?

Thanks for your advice again! Its really appreciaited! The governments tax website is far to confusing for me.

[Illusionary]

(Original post by so_crunchy)
Illusionary


Thanks for responding. You were very helpful and helped to clear things up for me. I'm grateful for the time and effort you put into your response. Couple of questions on your comments:
My final tax code on my P60 is 603L as you state above. I earnt £8705 and the total tax deducted was £533 for this year. Does this appear coorect to you? Is it worth me adding a copy of the p60 and asking them to review that it is correct or just to leave it?

(£8,705-£6,035)×20%=£534, so that looks correct to me

(Original post by so_crunchy)
I earnt £6833 in this year. Paying £826 tax. I will send off one of these P50 forms. Two small questions: 1) How much tax do you think i will get back? 2) How long does it take them to process this?

Thanks for your advice again! Its really appreciaited! The governments tax website is far to confusing for me.

(£6,833-£6,475)×20%=£72. You've paid £826, so I'd expect you to get a refund of about £754 (though if that £826 includes any National Insurance Contributions, which would be shown separately, you won't be able to reclaim those).

I'm not sure how quicky HMRC are processing refunds at the moment, particularly given that the self-assessment deadline for 2008/09 is fast approaching, so they're likely to be very busy at the moment. There's no harm in making a quick call to your tax office to them to ask.

[adambro]

I was in exactly the same situation, albeit a year earlier, and received a similar amount back in overpaid tax. Definitely worth doing and pretty straightforward. I just phoned the relevant tax office and explained that I had overpaid and they were able to guide me through the process. For the second tax year, 09/10 in your case, you'll need to declare that you don't expect to be employed before the end of that tax year so perhaps worth thinking about whether you might get a part time job. I dread to think how many placement students don't realise how much money they've overpaid and can be refunded.

[Illusionary]

(Original post by adambro)
I was in exactly the same situation, albeit a year earlier, and received a similar amount back in overpaid tax. Definitely worth doing and pretty straightforward. I just phoned the relevant tax office and explained that I had overpaid and they were able to guide me through the process. For the second tax year, 09/10 in your case, you'll need to declare that you don't expect to be employed before the end of that tax year so perhaps worth thinking about whether you might get a part time job. I dread to think how many placement students don't realise how much money they've overpaid and can be refunded.

The form P50 actually involves declaring that you either don't expect to work again before the end of the tax year or that you've been unemployed for four months. Assuming that the OP hasn't worked since August, they'd be able to make that declaration regardless of their intentions for the rest of the year.

Even if you did declare that you don't expect to work again in the year, this isn't binding (plans can quite easily change!) so it shouldn't be too much of a concern anyway.

But yes, I'd agree that there's probably a shocking number of people who have overpaid without realising it. At least it might help us to improve the budget deficit that the country is currently seeing!

[adambro]

(Original post by Illusionary)
But yes, I'd agree that there's probably a shocking number of people who have overpaid without realising it. At least it might help us to improve the budget deficit that the country is currently seeing!

Indeed. I'm sure that someone else who went on a placement a few years before me said that HMRC had contacted them to make them aware of the overpayment. They don't seem to be doing that any more, I wonder why...

I do note though that HMRC have run some campaigns recently to make people aware of reclaiming overpaid tax so perhaps I'm just being cynical.

[Illusionary]

(Original post by nearlyheadlessian)
It's a great article. A couple of points you might consider adding to the section regarding self-employment (I know you want to keep it brief but I feel the couple of points I'm suggesting are relevant to a certain line of self-employed work that some students are involved in) are that once you commence work as self-employed you have three months to inform HMRC otherwise you're subject to a penalty. Additionally, if you're likely to earn less than about £4.8k (I forget the exact figure) you can apply for a certificate of small earnings which exempts you from NI payments in relation to the self-employment. It may also be worth adding, that depending on what it is you do as self-employed, there is no harm in keeping decent accounts and receipts and so on, to make the tax return that little bit easier.

Updated and all sorted now; thanks again for the suggestions.

[so_crunchy]

One last question for you.

After completing the form and reading the instructions im about to send that & my p45 (parts 2+3). It says that i will be paid via a ank transfer. However, there is nowhere for me to specify my sort code or account number. Will they know my bank details or should i include it on a peice of paper?

Thanks again so much for all your help! Cant wait to get my hands on this money!

[Illusionary]

(Original post by so_crunchy)
One last question for you.

After completing the form and reading the instructions im about to send that & my p45 (parts 2+3). It says that i will be paid via a ank transfer. However, there is nowhere for me to specify my sort code or account number. Will they know my bank details or should i include it on a peice of paper?

Thanks again so much for all your help! Cant wait to get my hands on this money!

From the bottom of page two of the form:

What to do next
Send your completed form to the address on the front of this form with your P45 (parts 2 and 3).

How you’ll get your repayment
Your HMRC office will send any repayment due to you by post, with a new form P45 (parts 1A, 2 and 3), if necessary.
Repayments of Income Tax are made by payable order crossed ‘Account Payee only’ which have to be paid into a bank or building society. If you want the payable order to be sent direct to your bank or building society please give their name and address and your account number in a separate letter. If you do not have a bank or building society account please give the name and address of someone who does, so we can make the payable order out to them.

So, if you want the money to come as a direct bank transfer, just put your details in a separate letter.

[rambo31]

Hello, I need advise for understand what can I do !

I explain : On october, I started to work for the first time but my employer never told me to sign a P46 form. He didn't use my NIN, also, I paid a lot of taxes.

On start of january, I quite this job. On my new job, they ask me my P46.

I just start to understand that I need a P46 from my first job. If

Is it possible to start the procedure for have a P46 even 4 months after my first pay ?

Please help me because I'm french, don't understand everything with the UK law and I really would like my taxes refund !

Thank you very much !

[IGX_RSV2]

They need your P45, which you should have gotten from your last employer.

P46 is for someone without a P45. Your current employer can give you a P46 form to fill out if you don't have your P45 from your last employer.