Sorry, students are treated the same as anyone else for tax purposes in that if their income exceeds what the Revenue call the Personal Allowance they start to pay tax.

Some income is taxable and some is tax-free. We have listed the most common types of tax-free income here. Everything else is likely to be taxable. Click here to see a list of taxable income sources.

Everybody has a tax free personal allowance. For a person below the age of 65 that allowance for the tax year starting on 6 April 2010 and finishing on 5 April 2011 is £6,475, which means that you can earn up to £6,475 before you start to pay tax.

If you have any money on deposit at a bank or building society, any interest you earn on it counts towards using up your £6,475 personal allowance and you have to add it to any money you may earn through getting a holiday job.

Example

Adil is a 19 year old student. He works in a fast food restaurant during his breaks and during term time he helps out at the local bookshop. Adil has invested his earnings in a building society account and he has some shares that his mother gave him on his 18th birthday on which he gets some dividends.

Adil's income for 2010/11 is as follows:

Fast food restaurant   £2,700

Bookshop   £1,200

Building society interest   £ 350*

Dividends   £ 290 (including £29 non-repayable tax credit )

Adil's total income for 2010/11 is £4,540

He has a tax-free allowance for the year to set against this of £6,475. Adil will not need to pay any further tax but he will be unable to reclaim the notional tax of £29 taken off his dividends.

* As Adil's income is less than his tax-free allowance, he is a non-taxpayer and so he was able to register to receive his interest without tax taken off using a form R85, which he got from his building society.