Everyone in the UK who earns or receives income over a certain amount in the tax year pays income tax. The UK tax year runs from 6th April until 5th April the following year. Generally, the more you earn the more you pay. If you work for an employer, he or she will usually take the tax from your earnings each payday and pass it on to the Inland Revenue. This saves you having to pay tax in one go at the end of the year.
However, if you are a student on a course in the UK and you work solely in the holiday periods (summer, winter, spring) you may not have to pay tax. You will need to ask your employer for a student exemption Form P38(S).
To receive your wages without tax being deducted you must:
- be a student who is planning to continue to be a student until after the end of the current tax year
- not have a total income from all sources, apart from student loans, scholarships and educational grants, in the tax year of more than £5,225 (in 2007/2008)
If you do not meet these conditions, you should ask your employer for a Form P46. You will then be taxed under a system called Pay As You Earn (PAYE). Once the Inland Revenue has received your completed Form P46, they will:
- issue you with a tax code that shows your entitlement to any allowances and deductions
- inform your employer of your tax code to enable him to deduct the correct amount of tax and National Insurance contributions direct from your wages
Information about the national minimum wage can be found here.
National Insurance
You will not pay any National Insurance, if you are paid less than £99 a week. If you receive more than this amount you will pay National Insurance on anything over this amount.
For further information on tax and national insurance go to the H.M. Revenue and Customs website.