How to pay income tax as a Sixth Form Student? (Finance Help PLS)

Hi everyone! I was wondering how tax income works in the UK for sixth form students with part time jobs. 12,570 is personal allowance, so does that mean I'd pay income tax on the money I earn after the threshold, or income tax on all the money I've earned within the year? And does this process differ if I decide to let's say freelance online on a website like upwork or freelancer? Do they still count as part-time jobs?
Also what would be the best credit/debit card for a student under 18?

Reply 1

DataVenia

Volunteer Team, Clearing and Applications Advisor

21

Original post by mackin_toshi

Hi everyone! I was wondering how tax income works in the UK for sixth form students with part time jobs. 12,570 is personal allowance, so does that mean I'd pay income tax on the money I earn after the threshold, or income tax on all the money I've earned within the year? And does this process differ if I decide to let's say freelance online on a website like upwork or freelancer? Do they still count as part-time jobs?
Also what would be the best credit/debit card for a student under 18?

The £12,570 personal allowance is per tax year (6th April one year until 5th April the next). You only pay tax on anything you earn above that threshold in a given tax year. So if you earned £15,000 one tax year, you'd pay income tax on £2,430.

Yes, they still count part-time jobs. They don't care whether it's full-time, part-time, or whether you earn all your income on Christmas Day.

For freelancing the way you'd pay the tax is different though. If you're an employee, then your employer will work out what tax (if any) you owe and take it from your earnings (handing it to the government) as you earn it. This is called PAYE (pay as you earn). If you're freelancing then you'll need to complete a Tax Return form once a year which details your income throughout the tax year. You then pay that tax in two installments - one in January and one in July.

If you breach the £12,570 limit you'll also have to pay National Insurance contributions. They rates you pay vary depending on whether you're employed (8% initially, reducing to 2%) or self employed / freelancing (6% of your profit).

Reply 2

martin7

20

Original post by mackin_toshi

Hi everyone! I was wondering how tax income works in the UK for sixth form students with part time jobs. 12,570 is personal allowance, so does that mean I'd pay income tax on the money I earn after the threshold, or income tax on all the money I've earned within the year? And does this process differ if I decide to let's say freelance online on a website like upwork or freelancer? Do they still count as part-time jobs?
Also what would be the best credit/debit card for a student under 18?

As @DataVenia says, it doesn't matter whether it's a full-time or part-time job. Also, the fact that you're a student isn't relevant -- and neither is your age.

Income tax on your income from normal employment is paid via your employer -- they deduct what needs to be paid and pay it directly to HMRC on your behalf.

Re credit/debit cards -- you're very unlikely to be able to get a credit card until you're 18. For debit cards, pretty much any current account would have one -- the question would be "what criteria would you use to determine which is 'best' for you?"
My understanding is that the first £1000 of income from self-employment doesn't need to be reported to HMRC; but beyond that you do need to register with HMRC and you will need to declare you income via self-assessment (and pay income tax and possibly National Insurance). I'm certainly not an expert on this, and you'll need to do your own research.

Reply 3

mackin_toshi

OP

6

Original post by DataVenia

The £12,570 personal allowance is per tax year (6th April one year until 5th April the next). You only pay tax on anything you earn above that threshold in a given tax year. So if you earned £15,000 one tax year, you'd pay income tax on £2,430.
Yes, they still count part-time jobs. They don't care whether it's full-time, part-time, or whether you earn all your income on Christmas Day.
For freelancing the way you'd pay the tax is different though. If you're an employee, then your employer will work out what tax (if any) you owe and take it from your earnings (handing it to the government) as you earn it. This is called PAYE (pay as you earn). If you're freelancing then you'll need to complete a Tax Return form once a year which details your income throughout the tax year. You then pay that tax in two installments - one in January and one in July.
If you breach the £12,570 limit you'll also have to pay National Insurance contributions. They rates you pay vary depending on whether you're employed (8% initially, reducing to 2%) or self employed / freelancing (6% of your profit).

Thank you!

How to pay income tax as a Sixth Form Student? (Finance Help PLS)

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