Students with summer jobs: check your tax

Working students – what are the tax issues?

Many students work to help make ends meet. Fitting in work around studying and exams can leave the tax system struggling to keep up.

For example, you might:

• work during your vacations and/or in term time
• work in several jobs at once
• frequently move from one job to another
• do odd agency jobs, or
• do a ‘sandwich’ course, during which you work for a year.

This means you can pay too much tax and have to claim or wait for a refund from HMRC. There is also a risk that you might not pay enough and be presented later with an unwelcome tax bill. So it pays to make sure you know where you stand.

How does PAYE work for students?

The same as it does for other employees! HMRC used to have an option for students to work in the summer break without tax being deducted, but this disappeared in 2013.

If you are entitled to a UK personal allowance, you can have income up to £12,570 in each tax year without owing any tax. A tax year runs from 6 April to 5 April, so we are currently in the 2024/25 tax year (6 April 2024 to 5 April 2025).

But this does not mean you will get all your income without tax being taken off it – even though you might not think you are earning enough to pay tax!

PAYE for employees is the system your employer uses to take tax off you before you get paid. It works by your employer applying a ‘code’ to your pay to work out how much tax to take off. Your employer sends information to HMRC about your employment and HMRC tell your employer which code to use.

So what do I need to do?

Our message is simple: check your tax! Do not assume that your tax code is right.

To help you understand your tax, National Insurance contributions and check your PAYE code, you will find lots of helpful guidance in our sections on Employment and Pay As You Earn.

You can even check your tax online or download the HMRC App.

Make sure you keep a copy or download your payslips, especially if you change jobs during the tax year.

If you have overpaid tax we have guidance on how you can claim a tax refund.

I have a side hustle: what tax do I pay on that?

There are many different ways to earn a bit of extra money other than getting a ‘traditional’ employed job.

Earning money via online platforms – for example by getting ‘gigs’ like running errands and making deliveries – might not be treated as employment income for tax.

Again, we have lots of information about this on our website. Read our guidance on the Gig economy.