For thousands of students across the UK, a part-time job is more than just a source of extra income — it’s a way to gain independence, develop professional skills, and manage day-to-day living costs. Whether they work in retail, hospitality, or as online freelancers, many students find themselves earning enough to wonder: how does tax actually work when you’re a student?
The answer isn’t always straightforward. The UK tax system doesn’t treat students any differently from other workers — meaning that if income crosses certain thresholds, tax may be due. Yet, with the right knowledge and approach, students can avoid overpaying tax, claim refunds, and make smart financial decisions early in life.
This guide breaks down everything a UK student with a part-time job needs to know about tax — from payslips to refunds, National Insurance, and even self-employment.
1. Do Students Pay Tax in the UK?
The short answer is yes — if they earn above the personal allowance.
Every individual in the UK, including students, gets a personal allowance — the amount they can earn tax-free each year. For the 2024/25 tax year, this allowance is £12,570. If a student’s total income from all sources (part-time work, freelancing, investments, etc.) stays below that threshold, they won’t owe any income tax.
However, it’s important to understand that:
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Employers must still deduct tax via PAYE (Pay As You Earn) if earnings are irregular or if the correct tax code isn’t applied.
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Students might pay tax temporarily and later reclaim it through HMRC if their annual income remains under the limit.
This means many students do pay tax initially — but are entitled to get it back later.
2. Understanding Payslips and Tax Codes
Every employed student should receive a payslip each time they’re paid. It shows:
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Gross pay (before deductions)
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Income tax and National Insurance contributions
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Tax code
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Net pay (after deductions)
The tax code determines how much tax the employer deducts. Most students will have 1257L, which corresponds to the standard personal allowance of £12,570.
If the code looks unusual (for example, starts with “BR” or “0T”), it could mean the employer is taxing all income at the basic rate — common when the employer doesn’t have a P45 from a previous job.
In such cases, students often overpay tax and can later claim a refund once HMRC has the correct information.
3. How to Claim a Tax Refund as a Student
Many students change jobs or work seasonally, especially during holidays. Each time, the tax system may treat them as starting a new employment record — leading to temporary overpayment.
To claim a refund:
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If still working, contact HMRC to correct the tax code.
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If the job has ended, fill out a P50 form to request a refund for the tax year.
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If multiple jobs were held in one year, file a Self-Assessment if HMRC requests it, or wait for a P800 tax calculation from HMRC at year-end.
Refunds are usually processed within a few weeks and paid directly into the student’s bank account.
4. National Insurance: What Students Need to Know
Unlike income tax, National Insurance (NI) contributions are based on weekly earnings, not annual totals.
For 2024/25, employees pay:
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12% NI on weekly earnings above £242, and
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2% on anything above £967 per week.
This means that even if a student earns less than £12,570 per year, they might still pay NI if their weekly incomeexceeds the threshold — for example, during busy holiday shifts.
Students do not normally pay NI on bursaries, scholarships, or student loans.
5. Tax on Multiple Part-Time Jobs
It’s common for students to juggle more than one job — perhaps working in a café on weekends and doing evening shifts elsewhere. However, this can complicate tax calculations.
The personal allowance applies only once. The first employer who holds the “main job” gets the benefit of the £12,570 allowance. The second job, unless HMRC assigns a split tax code, will usually be taxed at the basic rate (20%) from the first pound earned.
To avoid overpaying:
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Inform HMRC about multiple jobs so they can assign the correct tax code to each.
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Use HMRC’s Personal Tax Account online to track tax codes and income from different employers.
6. Freelancing, Gig Work, and Self-Employment
The rise of digital platforms has made freelancing increasingly popular among students. Whether tutoring online, creating digital content, or working as delivery riders, many earn money outside traditional employment.
If self-employed, students must:
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Register with HMRC as self-employed if annual income exceeds £1,000 (the “trading allowance”).
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Keep accurate records of income and expenses.
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File an annual Self-Assessment tax return by 31 January each year.
Allowable expenses may include:
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Laptop or equipment used for work
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Internet and phone costs (proportionate to business use)
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Software subscriptions or learning resources
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Travel for business purposes
Students earning modest freelance income may not owe tax, but they still need to declare it properly to remain compliant.
7. The Trading Allowance Explained
The trading allowance is a useful relief for small-scale earners, including students. It allows up to £1,000 in gross income from self-employment to be earned tax-free, without the need to register or file a return.
For example:
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A student earning £800 a year from tutoring or selling handmade crafts does not need to declare this to HMRC.
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But if they earn £1,500, they must register and can choose to either:
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Deduct the £1,000 allowance instead of actual expenses, or
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Deduct actual business expenses if higher.
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This flexibility helps students keep their tax affairs simple and fair.
8. Student Loans and Tax
Student loan repayments are handled separately from income tax, but understanding when they start is crucial.
Repayments begin only after graduation, and only when earnings exceed specific thresholds:
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Plan 2 (post-2012 undergraduates): £27,295 per year
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Plan 4 (Scottish loans): £31,395 per year
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Postgraduate Loan: £21,000 per year
Most part-time working students will earn well below these figures, meaning no repayment deductions occur while studying.
However, once full-time employment begins after university, repayments are automatically deducted alongside PAYE tax.
9. Common Tax Mistakes Students Make
Many students unintentionally lose money because they misunderstand the tax system. The most frequent mistakes include:
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Not checking their tax code after starting a job
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Failing to reclaim overpaid tax when income was below the allowance
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Ignoring freelance income, assuming small amounts “don’t count”
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Throwing away payslips or not downloading P60s at year-end
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Not keeping expense receipts for self-employed work
By adopting good habits early — checking payslips, storing documents, and using HMRC’s online tools — students can build responsible financial routines that serve them long-term.
10. Scholarships, Grants, and Bursaries
It’s important to note that most scholarships, bursaries, and grants are not taxable.
These are considered educational support rather than income, provided they are used for study-related costs (tuition, accommodation, books, etc.). However, if a student receives additional payments for work — such as teaching or research assistance — those may count as taxable income.
If unsure whether a particular payment is taxable, students should review their award letters carefully or check HMRC guidance.
11. How to File a Self-Assessment as a Student
Students who earn through freelancing, content creation, or other self-employed activity must complete Self-Assessment.
Steps include:
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Register for Self-Assessment via the HMRC website.
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Keep income and expense records throughout the year.
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File online by 31 January following the end of the tax year (5 April).
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Pay any tax owed by the same deadline.
Using accounting software or simple spreadsheets helps track income accurately. For first-timers, consulting a professional adviser ensures that claims are correct and avoids penalties for late submission.
12. Understanding the P45, P60, and P800
Several tax documents are important for students to understand:
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P45 – Issued when leaving a job; summarises total pay and tax paid so far in the year.
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P60 – Provided by employers at the end of the tax year; summarises annual income and deductions.
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P800 – Sent by HMRC when they calculate that too much or too little tax has been paid.
Keeping digital or printed copies of these documents ensures accurate records for refunds or future job applications.
13. How Tax Works During University Holidays
Students often earn most of their income during summer or Christmas breaks. This irregular earning pattern can lead to short-term overtaxation if employers assume they’ll continue earning at that rate all year.
If a student works intensively for a few months and then stops, HMRC automatically reconciles their income at year-end. Most overpaid tax is refunded automatically or can be reclaimed via the P50 form if no other income will be received that tax year.
14. Saving and Planning Ahead
Tax awareness is part of wider financial literacy. By managing tax smartly, students can:
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Build early saving habits
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Avoid cash flow shocks during term time
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Gain confidence in managing adult responsibilities
Opening an ISA (Individual Savings Account) or setting aside a portion of income for emergencies helps establish healthy money practices while studying.
15. When to Seek Professional Advice
While student tax matters are often straightforward, situations involving multiple jobs, freelance income, or international earnings can quickly become complex.
For peace of mind, professional guidance can be invaluable. Some students — especially international students or those earning through online platforms — choose to consult experts such as My Tax Accountant, who provide tailored personal tax services and can help ensure compliance while maximising available reliefs.
Getting advice early can prevent costly mistakes and provide clarity on future obligations.
16. Tips for Staying Organised
A few simple steps can make tax management much easier:
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Keep all payslips and P45/P60 forms in one place.
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Check your tax code every time you start a new job.
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Use HMRC’s Personal Tax Account to monitor income and payments.
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Record freelance income and expenses as they happen.
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File any Self-Assessment early to avoid last-minute stress.
Being proactive can turn tax season from a source of anxiety into an opportunity to stay financially smart.
17. International Students Working in the UK
International students often have the right to work part-time (usually up to 20 hours per week during term time) if their visa allows. They are generally taxed the same way as UK residents.
If they plan to leave the UK after finishing studies, they should inform HMRC to ensure any tax refunds are processed correctly before departure.
18. The Bigger Picture: Building Financial Awareness Early
Understanding how tax works is one of the most practical financial skills a student can develop.
By keeping records, claiming refunds, and learning to interpret payslips, students build confidence for future employment or entrepreneurship.
Good tax habits today — like reviewing income regularly or setting aside funds for obligations — create financial discipline that lasts a lifetime.
Conclusion
Taxes may not be the most exciting part of student life, but handling them wisely can make a real difference. Most UK students won’t owe much, if anything, yet overpaying or missing refunds is surprisingly common.
By understanding personal allowances, checking tax codes, and claiming entitlements, students can keep more of what they earn and avoid unnecessary stress. For those with multiple income sources or freelancing ambitions, taking professional advice ensures compliance and confidence.
Managing tax the smart way isn’t just about saving money — it’s about taking control of one’s finances early and laying a foundation for long-term financial success.
