Tax and National Insurance Contributions for students coming to the UK

If I pay National Insurance Contributions (NICs) - can I transfer them to my own country when I return there?

Other Information for students coming to the UK

Getting VAT refunded on things you buy if you do not come from an European Community (EC) country

Tax and National Insurance Contributions for students coming to the UK

In this part of the website we cannot cover all the issues affecting students in the UK and we cover here just a few tax and National Insurance issues that relate to international students coming to the UK.

To get a wider understanding of how the UK tax system affects all students you need to have a look at the section on their website produced by the Revenue specifically for UK students. You can find this here.

Will I be resident and ordinarily resident (OR) in the UK if I come to study here?

• If you come to the UK as a student to study for not more than 4 years you will not be treated as ordinarily resident (someone who lives in the UK permanently or indefinitely year on year) if you do not own any property in the UK or you do not lease a UK property for more than 3 years.



• In addition when you leave the UK you must not plan to return here regularly for visits averaging 91 days or more in a tax year.

Example

Karl came to the UK to study for a postgraduate degree for 3.5 years. While studying in the UK, Karl stayed with family based here returning abroad to work once the degree course finished. As Karl did not lease or buy any accommodation and his course was for less than 4 years, he will not be treated as ordinarily resident in the UK but he will be resident as he is staying in the UK for over 183 days in each tax year whilst studying.

If however when he finished his course Karl decided to come back to the UK for 4 months each year to stay with some friends he had made while studying, he will be treated as both resident ordinarily resident for the period he was a student.

Julio came to study for a three-year degree in the UK. In the first year he lived in college accommodation but for the second year he leased a property for the remaining 2 years of his course. When the course finishes Julio will be returning abroad to work and he does not intend to return to the UK apart from a short 3-week holiday to visit college friends. Julio will not be treated as ordinarily resident in the UK.

Can I work in the UK while I am a student?

• If you are a student from an EEA country or Switzerland - you do not need permission to work in the UK. You will need your passport or identity card and you may need to show this to your employer as proof of your identity.
  
  
• If you are a student from outside the EEA you can:
  • Take a work or internship placement with an employer or;
  • Work in your free time during the course or full or part time in holidays.....
  unless your passport is stamped specifically - 'No work' or similar and you do not have the consent of the Secretary of State to do so.



• An internship is a short period of paid work that an employer may offer a student as a future potential employee. The internship should not be for longer than 3 months.



• You will also be able to follow a sandwich course even if there are restrictions on your employment providing placement does not extend beyond the end of the course. A sandwich course is a course with a set work element.



• If you are a non-EEA student you can work for up to 20 hours a week in term time unless you have a work placement or internship but you must be employed and not self-employed. You can however work full time during vacations.



• These are only the basic rules. For more information you should have a look at the Department for Innovation, Universities and Skills (previously the Department for Education and Skills) leaflet - International Students working in the UK - what you need to know or you can call +44(0) 114 259 4074 for more help.

Will I be taxed on my earnings if I work in the UK while I am here as a student?

• Normally if you are both resident and ordinarily resident or just resident in the UK you will be taxed here on any earnings you receive while working for a UK employer.



• Under most tax treaties, if you are an overseas student visiting the UK solely for full time education, you will not need to pay tax on any payments made for your maintenance or education whilst you are a student if the payments are from sources outside the UK. Some agreements also exempt you from tax on certain earnings from employment here. You might need to get some further advice on this by contacting the Revenue.

Will I have to pay NI Contributions (NIC) if I work in the UK while I am a student?

• You will only need to pay UK NIC if you are over 16 and resident in the UK. This will apply to most full time students in higher education.



• Click on the relevant links for more information on NIC for the employed or NIC for the self employed which explains with examples how the system works.



• If you work while you are a student and your earnings are less than £105 a week - you will not need to pay NIC at all.



• If you earn over this amount - your employer will deduct your contributions from your wages before paying them over to you. These will be Class 1 contributions and may be transferable to your own country's scheme if you come from a country within the European Union or if the country has an agreement with the UK covering NIC.



• If you are a postgraduate student and you are paid for teaching while in the UK, you may be liable to pay NIC depending on the level of your earnings. The payroll office of your college or university should be able to help advise you on this.



• Placement students are liable for Class 1 NIC for any earnings they receive during work experience. If you continue to receive any wages while you are at college these will also be liable to NIC.

What happens to my student loan when I return home to work after I finish my course?

• Only limited categories of student are eligible for UK student loans (e.g. British citizens and people with settled status, EEA migrant workers, refugees etc, who may also have to meet additional requirements. These further conditions may involve being ordinarily resident in the UK or EEA for 3 years). Most international students therefore cannot get a student loan. You can find out more about your eligibility for UK student support by looking at the British Council Student Support information.



• If you do have a loan then from 6 April of the year following the date your course ends or you leave the course - payments begin once you are earning over £15,000 per year. As with UK taxpayers, you will be required to repay 9% of the excess of your total income each tax year over £15,000. If you do not earn £15,000 you will not need to make any payment. You need not include unearned income e.g. savings in the total unless the amount you receive each year is more than £2,000. Have a look at an example of how this works.



• If you are working outside the UK for a non-UK employer, you will be asked to make your loan repayments direct to the Student Loans Company (SLC). The SLC will contact you before you are due to start making your repayments for some evidence of your income and they will then use that to work out what you need to repay.



• The repayments need to be in Pounds Sterling and not your local currency.




• There are penalties for failing to give the required information about your income or failing to make repayments and these differ from those for UK taxpayers:

  • If you do not inform the SLC you have returned abroad or you do not give them information they have requested - the rate of interest on your account can be increased to three times the normal rate.
  
  
  
  • If you fail to provide SLC with details of your annual income, they will base your repayments on a level of earnings twice the amount of UK average earnings.
  
  
  
  • If the failure to make repayments continues - the SLC can apply to a court for full repayment of the loan as a single lump sum.
  
  
  
  • You can find more information on student loans generally by clicking here .

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If I pay National Insurance Contributions (NICs) - can I transfer them to my own country when I return there?

If you work as an employee in the UK you will pay Class 1 NICs which may be transferable to their own country's scheme if you come from a country within the European Economic Area (EEA) or if the country has an agreement with the UK covering NIC.

• If you return to another European Economic Area country (see title link above) after employment in the UK and you make a claim to benefit under that country's scheme, under certain circumstances your UK National Insurance contributions may help your claim.



• If a record of UK contributions is needed by the authorities in the other country to decide a claim they will contact the HMRC Residency (Newcastle) on your behalf to obtain details of your UK insurance record.



• The foreign authority may, exceptionally, ask you to get either a Certificate E104 which shows insurance for sickness and maternity purposes or an E301 which shows insurance for unemployment purposes.



• If the foreign authority asks you to do that, you need to complete form CA 3916 and return it to the address shown on the front. It would be useful if you could send copies of your last pay slip and any P60 certificates (certificate of total pay and tax deducted for a tax year) with the CA3916 when making the application.



• This is because it may be necessary to get in touch with the employers you used to work for in the UK before a certificate can be sent.



• The claim will be decided using the other country's rules: it will not be decided under UK rules. Form E301 does not give a person any automatic right to receive unemployment benefit in another EU country.



• If you come to the UK with a certificate E101 or E102 from one of these countries showing that you are exempt under the special rules, you will be exempt from National Insurance until the certificate expires.



• European Economic Area rules mean that if you do not hold an E101 or E102 you will be required to register for a National Insurance number and pay National Insurance contributions on the same basis as a person who normally lives and works here but you may be able to claim as outlined above.

Reciprocal agreement countries

• There are special rules if you are coming to the UK from one of the countries listed below. Details of how NI works for someone who has worked in the UK can be found in the individual social security agreements.



• If you come to the UK with a certificate from one of these countries showing that you are exempt under the special rules, you will be exempt from NICs until the certificate expires.



• If you do not hold a certificate from your home country, you will be required to register for a National Insurance number and pay NICs on the same basis as a person who normally lives and works here.

List of Reciprocal Agreement Countries

*The Slovenia part of the Yugoslavia Reciprocal Agreement has been superseded by the European Community Regulations.

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Other Information for students coming to the UK

The UKCISA website has a very useful section for students coming to the UK covering finance issues other than tax.

In summary the Finance section looks at:

• The cost of living in the UK;
• How much cash you need to bring with you;
• Whether you will pay the 'home' or 'overseas' fee and the amount of the 'overseas' fee;
• Scholarships;
• Claiming UK welfare benefits

The UKCISA website also offers advice on immigration issues such as:

• Do I need to get a visa before I travel to the UK?
• What conditions must I meet to be a student in the UK?
• Can I bring my family with me to the UK?
• I have not yet finalised my arrangements; can I come to the UK to attend interviews for a place on the course?

If you want to work in the UK you can find more information about:

• Working whilst you are studying or;
• Having a member of your family working in the UK whilst you are studying, and;
• Staying to work in the UK after you have finished your studies.

There are also a few general topics such as:

• Free health care and claiming welfare benefits;
• Recognitions of your qualifications in the UK;
• Different UK courses of study;
• Finding out about UK institutions offering the qualification you want and applying for a course;
• Finding somewhere to live in the UK;
• Using your driving licence here
• Council tax & international students - this is a factsheet which you might find useful.

NUS website

• The NUS factsheet on information for international students needs updating but the latest version is worth a look.



• There is however a useful factsheet on Students & council tax with a section for international students which is currently available.

Getting VAT refunded on things you buy if you do not come from an European Community (EC) country

• To see whether this applies to you, you can find a list of the 24 EC countries below:

  Austria
  Belgium
  Cyprus
  Czech Republic
  Denmark
  Estonia
  Finland
  France
  Germany
  Greece
  Hungary
  Ireland
  Italy
  Latvia
  Lithuania
  Luxembourg
  Malta
  Netherlands
  Poland
  Portugal
  Spain
  Slovak Republic
  Slovenia
  Sweden
  



• When you visit the UK you will pay VAT on most things you buy.



• But there is a scheme allowing you to claim back the VAT you have been charged on most of the goods you take out of the UK.



• The scheme is normally advertised in UK shops as Tax Free Shopping. Not all shops operate the scheme so look for shops displaying a Tax Free Shopping sign or ask a shop assistant before you buy.




• You will qualify for the refund scheme if you are:

  • An overseas student - if you are studying in the UK you can use the scheme only if you are leaving the EC for a minimum period of 12 months - this will typically be at the end of your study period;
  • your place of residence is not in the EC (although you may qualify if you are leaving the EC for at least 12 months);
  • you intend to leave the UK for somewhere outside the EC with the goods by the last day of the third month following
  • the month when you purchased the goods e.g. goods purchased on 1 Sep must be exported by 31 December - you produce the VAT refund form and receipts together with the goods to Customs at your point of departure from the EC.



• The scheme does not include a number of items including more commonly:

  • mail order goods including those purchased over the internet;
  • goods for consumption in the EC, for example, perfume which is wholly or partly consumed in the EC;
  • goods to be exported as freight apart from antiques;
  • goods needing an export licence


• When you buy the goods the retailer will ask you for proof that you are entitled to use the scheme. You will normally be asked to produce your passport although you may be asked for another form of identification. They will then ask you to fill in a simple refund form.



• The main thing to remember is that you need to have one of these forms to make your claim - you cannot just present the till or online purchase receipt.




• If you are:

  • leaving the UK direct for a destination outside the EC, you must show your goods and refund form to UK Customs at the airport/port you are leaving from; or
  • leaving the EC via another EC country, you must show your goods and refund form to Customs staff of that country; or
  • leaving the EC on a transit flight via another EC member state, you must show Customs in the last EC country your refund form and any goods you have as hand baggage. You must show Customs in the UK your refund form and any goods to be carried in the hold of the aircraft.



• After Customs have certified your form you can get your refund by:

  • posting the form to the retailer from whom you bought the goods; or
  • posting the form to a commercial refund company; or
  • handing your form in at a refund booth to get immediate payment.


• Customs are not responsible for making the refund so when you buy the goods ask the retailer how the refund will be paid. If you do not receive your refund within a reasonable period of time you should contact the retailer concerned, not HM Revenue & Customs.

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