⚠️ Our Tax Guide for Students guidance has moved to the LITRG website. If you are a student or have a student loan and have a query about any of the issues we cover in the section, please let us know by filling in the Contact Us form.
Types of student
Are you a mature student? No, this isn’t a trick question. Traditionally the view has been that a mature student is over the age of 21 when starting a course. More recently the term is applied to anyone who has had a break between leaving one form of education and then starting further training.
The tax rules treat you in the same way as other students, but as a mature student you may have some different issues arising compared to the more traditional student. Below, we explain some of the common scenarios mature students may face which could cause you to interact with the tax system.
I have stopped working to start studying. What are the tax implications?
You may have given up a job to return to education. Most courses start from September, however the tax year runs from 6 April to 5 April so if you have been working from April to September and then you stop, it could be the case that you have not used all your personal allowance. If so, then you may be due a tax refund; the page How do I claim back tax I have overpaid through PAYE on wages or pensions? explains how you can claim a refund before the end of the tax year, if you want.
It may be the case that you have recently been made redundant and have decided to study for further qualifications; if so you will need to understand how any redundancy payment may be taxed. The page What tax do I pay on redundancy payments? covers this.
You may have built up savings while working, you should ensure that you know whether these savings are and should be being taxed. For further information see our page on Savings and tax.
If you are taking a break from working, then you may want to consider your National Insurance contribution position. By paying National Insurance you have been building up your entitlement to certain benefits, such as the state pension, however, by stopping work to study you may find that you have not made overall sufficient contributions. You can find out how much state pension you are expected to receive at GOV.UK, and based on this you may decide to make voluntary Class 3 National Insurance contributions. There is more information on National Insurance in our Tax basics section. Do bear in mind you may be eligible for National Insurance credits if you are claiming child benefit, for example.
I have retired and started a course. What are the tax implications?
You may have retired and returned to education, in which case one of your main concerns will be to make sure your pension income is being taxed correctly; we cover this in the section below.
If you have savings, then depending on your total taxable income it could be the case that your savings may not be subject to income tax or may qualify for the starting tax rate for savings. Further information is available on our Savings and tax page.
I am receiving a pension while I study. What are the tax implications?
As soon as you begin to receive a pension, you need to check your tax position carefully.
All pensions are taxable, including the state pension, so if you are receiving more than one pension or a pension and other earnings, you need to check your Notice of Coding carefully.
You should note that although the state pension is liable to income tax, there is never any tax deducted from it when it is paid. This means that your personal allowance will need to be used at least in part against this source and means you have less allowances to set against other sourses of income.
Pensions, other than the state pension, from 6 April 2015
The rules relating to drawing pensions, other than the state pension, changed substantially from 6 April 2015. In general, a lump sum payment of up to 25% of the pension fund may be paid to you tax-free, provided you have reached retirement age. There is also increased flexibility in the way you can access the balance of your pension savings, although if you are in a defined benefit (or ‘final salary’) scheme it is likely that you will continue to receive a regular income.
Before you take any action with regard to drawing a pension, we recommend you seek guidance from Pensionwise, who will provide free independent guidance or from an independent financial adviser, who you will have to pay.
Because you may choose to receive sums from your pension scheme(s) at more irregular intervals, it is crucial that you let HMRC know what you withdraw and when. You should also keep all details of any tax deducted from pension withdrawals safe as this may support a repayment claim in the future: in any case it will confirm tax you have already paid should you have further tax to pay.
For further information on the rules relating to the taxation and accessing of pensions, we recommend you visit our Pensioners section.
I have started a course and am also looking after my family. Is any state help available?
You may have family responsibilities that entitle you to claim certain benefits or tax credits; this extra income could help you while you are studying. There is more information in our Tax credits and benefits section. In addition, if you have responsibility for looking after a child, you may receive National Insurance credits. You can read more about these credits in our Tax basics section.
What tax do I pay if I am working as well as studying?
It could be that you have retained a part-time job to finance your studies or you are working full-time and studying at weekends or during the evenings or perhaps you are on a sandwich course. If you are trying to juggle work and studying you will need to make sure that you are not overpaying tax and, if you are, then remember to claim a tax refund.
The first thing you should do is check that your PAYE code is correct on your payslip: this will affect what tax allowances you are receiving. Our Employment section covers how to check your PAYE code and what to do if it is wrong.
If you have two or more jobs, neither of which pays enough to use up your personal allowance, you can contact HMRC and ask them to split your personal allowance between the jobs. This will mean that you do not pay too much tax during the year. Our Having more than one job factsheet provides further information on this.
If you think you have overpaid tax, then you could be entitled to a tax refund. Our page How do I claim back tax I have overpaid through PAYE on wages or pensions? explains how you can reclaim overpaid tax within the allowed time limits.
It may be the case that your employer is paying for you to study in order to help you with your current role. If so, you may be exempt from tax and National Insurance contributions on that sponsorship income; you can find more information on what conditions need to be met for employer-sponsored courses on our dedicated page.
Do I get tax relief if I pay my own course fees?
There is usually no tax relief on these payments so you should ensure you are paying your course fees in the way that best uses your financial resources. Be careful if you sell assets (things) to help pay your fees. You might create a charge to capital gains tax.
Where can I find more information?
Our Employment section provides information for you if you have ceased working to take up your studies or if you are continuing to work.