1. Home
  2. Tax Guides
  3. Students
  4. Working

Working

Updated on 12 April 2023

Students

Whether you have a job or you are running your own business it makes sense to sort out your tax from day one.

To help finance your studies, you might decide to work either on a full-time or part-time basis – for an employer (in other words employed) or for yourself (in other words self-employed). You might work regularly throughout the year, but more often than not you will work more hours over your vacations.

Image of people or students working with computers

How do I know if I am employed or self-employed?

It is not a question of choosing one over the other – it depends on the contract you have and on how you actually work. Sometimes it is easy to work out whether you are employed or not, but sometimes it is not, and you may need to follow our guidance to help you decide. Our guidance also includes links to the tools used by HMRC.

What earned income do I pay tax on?

All your earnings, whether from employment or self-employment, are liable to UK taxation if your earnings are sufficiently high, after deducting any allowable tax allowances. The UK income tax system works based on tax years that start on 6 April and end the following 5 April (for example the tax year 2023/24 runs from 6 April 2023 to 5 April 2024).

⚠️ Your tax obligations are very different, though, depending on whether you are employed or self-employed

How does the tax system work for employees?

The system works well for people with regular amounts of income, but, as a student, you may well not fall into this category: you might have more than one job at a time, move frequently between jobs, do work via an agency, take on an extra job during vacations, work overseas for a period of time, do a ‘sandwich’ course where you work for a year between periods of study or work for yourself.

You will need to take care that you do not pay more tax than you need to. If you are employed, your employer operates the Pay As You Earn (PAYE) system that takes both income tax and National Insurance contributions (NIC), if they are due, from your wages before paying you. However, as noted above, the PAYE system works best when you earn regular amounts of income from one employer. If you leave an employment part way through the year or have more than one job at a time, you may end up overpaying tax that you can claim back later. You need to take action because you may not be offered a tax refund automatically – and you only have four years in which to claim it.

Income tax deductions from your pay normally take into account any previous pay from that same employer (and possibly from other employers too) in the tax year. By comparing the amounts earned cumulatively and tax already paid, the PAYE system deducts the appropriate amount from your pay. This works well normally until you leave the employer or take a second job.

National Insurance contributions for employees do not work in the same way as income tax deductions: the system looks only at the contribution needed for that pay period. So earning a large sum in one week may lead to NIC being deducted from your pay that cannot be refunded, even though you normally earn a very small wage and ‘on average’ would not need to pay NIC.

How does the tax system work for the self-employed?

You may ‘work for yourself’ and so are self-employed. If you are self-employed, you will need to deal with HM Revenue & Customs (HMRC) and you may need to report your own income to HMRC and pay over the tax and NIC personally. We provide details of the main tax issues facing the self-employed in that section and our Guide to self-employment explains the less common tax rules and contains more detailed information including a case study showing how to prepare accounts and what to include on your 2022/23 tax return.

Is all the money I get taxable?

Some of the money you get may not be taxable – for example student grants, student loans or sponsorship money received. However, any student loan you get will have to be repaid if you earn above the repayment threshold after you have completed your course. Student loans are usually repaid via the tax system while you are in the UK. In addition, you may receive some additional support if you are disabled or are a carer; alternatively you may receive tax credits or universal credit. You should check carefully whether any state support you receive is taxable.

Where can I get more information?

If you have come from abroad to study and work in the UK, we suggest you also visit our International students page.

You may undertake temporary work through an agency, if this is the case you may want to refer to our information on agency workers in our Employment section which explains some of the tax issues you need to be aware of.

You may also undertake unpaid ‘work’ as a volunteer or intern to improve your chances of a permanent job in the future. If you are paid expenses in connection with this work, you may want to refer to our page I am a volunteer: are there any tax rules I need to be aware of?.

We cover taxation issues concerning both employment and self-employment in those sections of our website.

You may also find our guidance Understanding your payslip? helpful.

Tax guides

Introduction to the tax system How do I work out my tax? What income is taxable? What tax allowances am I entitled to? What tax rates apply to me? How is my tax collected? What if I cannot pay my tax bill? Do I need to complete a tax return? Self Assessment: understanding the basics What is Simple Assessment? How do I claim tax back? How do I claim back tax I have overpaid through PAYE on wages or pensions? How do I claim back tax if I complete a tax return? How do I claim back tax if I am taxed under the Construction Industry Scheme (CIS)? How do I claim back tax on savings income? How do I claim a marriage allowance refund? How do I claim back tax on a payment protection insurance (PPI) pay-out? Should I use a tax refund company? What is National Insurance? How do I get a National Insurance number? What are Specified Adult Childcare credits? What is Scottish income tax? What is devolution? Do I have to pay Scottish income tax? How does Scottish income tax work? What is Welsh income tax? Do I have to pay Welsh income tax? Do I have to join a pension scheme? Tax relief on your pension contributions HMRC digital services Enquiries, penalties, appeals, complaints and debt Enquiries How to survive an enquiry by HMRC Tax penalties Tax appeals Alternative Dispute Resolution How do I complain to HMRC? What if I cannot pay my tax bill? What if I have a tax credits overpayment?
Am I employed, self-employed, both or neither? Working through a limited company What is the national minimum wage? How do I work out my tax? What income is taxable? What tax allowances am I entitled to? What tax rates apply to me? How is my tax collected? How is tax collected on taxable state benefits? How do I check my coding notice? Do I need to complete a tax return? What tax do I pay on redundancy payments?Employment benefits and expenses What are benefits-in-kind? What payments and benefits are non taxable? What if I incur expenses in relation to my job? What travel expenses can I claim? What if I use my own car for business purposes? Payroll giving Allowances and expenses paid to armed forces personnel and deductions from their income Pensions and employees What is automatic enrolment for employees? What National Insurance do I pay as an employee? How do I repay my student loan? What if I do not pay enough tax? What if I pay too much tax? What if I work abroad temporarily? What if I am in the armed forces and work overseas? First time workers Apprenticeships

Share this page