December 2016 newsletter
Welcome to the last regular newsletter for 2016 from the Tax Guide for Students (TGFS) website. The purpose of the newsletter is to highlight any topical tax issues which may affect students, apprentices and student money advisers.
In this newsletter we discuss working during the Christmas holidays and what to do if this is your first job, and proposed changes to student finance in Wales. We also link to recent news articles from the Low Incomes Tax Reform Group (LITRG).
Don’t forget if you need to complete a Self Assessment Tax Return for the 2015/16 tax year then the filing deadline is 31 January 2017. There is more information and help on the LITRG website.
Working over the Christmas period
Many students find extra part-time work during the Christmas holiday break; here are some tips to make sure you take home the right amount of pay and don’t overpay your tax.
- First time workers – if this is the first time you have worked then you may be a bit confused about how much tax and National Insurance contributions are deducted, and what forms or information your new employer will ask for. Our TGFS section ‘First time workers’ explains what you need to know when your start your new job.
- Make sure you are being paid the right amount – if you are an employee then you should be paid the National Minimum Wage (NMW) which is based on your age (this will be called the National Living Wage if you are aged 25 or over). Our factsheet on NMW goes through the pay rates and the special rules which may apply, for example, if you are paid a piece-rate or are provided with accommodation. It also covers what you should do if you are not being paid the NMW.
- Check your payslips. Unfortunately mistakes can happen on your payslip such as using the wrong number of hours you have worked, or not including overtime hours at the agreed rate – if these errors happen, talk to your employer as soon as possible. One area where mistakes can frequently happen is HMRC providing your employer with the wrong PAYE (Pay As You Earn) code to use. Your PAYE code informs your employer how much your personal allowance is (the amount of income you can earn tax-free) so it is used to calculate your income tax. Make sure you check your PAYE code when you check your payslip, our factsheet on What should I see on my payslip? explains what you need to check and how.
- If you have more than one part-time job then you need to check you are not over-paying tax by having all your personal allowance allocated against your first employment and then being taxed at 20% on all your earnings from your other jobs. You should be able to stop this from happening or at least make sure that you have your personal allowance allocated to the job where you earn the most by contacting HMRC. Our factsheet ‘Students with multiple jobs’ talks you through what the issues are and how you can mitigate overpaying tax.
- National Insurance contributions (NIC) are calculated on a pay day basis and not looked at cumulatively on an annual tax year basis like income tax. So if you earn more than £155 per week then you will pay NIC even if you earn less than the annual primary threshold over the tax year. Our TGFS page ‘What National Insurance do I pay as an employee?’ explains how NIC is calculated.
- If you have overpaid tax then you can claim a tax refund. Depending on your personal circumstances you may not have to wait until the end of the tax year (5 April 2017) to do so. The TGFS website has a tax refunds section which explains how to check if you have overpaid tax and how you can reclaim it.
Student Finance in Wales
It was announced in November that the Welsh Government plans to provide a £1,000 means-tested grant to go towards living costs whilst studying. There are also planned changes to the grants for students from less well-off households, such as replacing the funding provided for tuition fees and maintenance with one single grant.
There is more information on this announcement on the Welsh Government’s website.
14 November: Has GOV.UK gone wrong for you?
24 November: The fall of the Autumn Statement