Finished working at your Christmas job? Make sure you have not paid too much tax.

The Christmas period is a good opportunity for students to make some extra money in a part-time job such as shop or bar work. However, you may have noticed on your payslip that tax was deducted; well the good news is that you can probably claim the tax back – this article will explain the process.

As a student working over the Christmas holiday, you may find that more tax is taken from your pay packet than you actually need to pay. The most likely reason for this is that you did not have an up-to-date tax code to be operated against your income meaning your employer could not deduct the correct amount of tax.

In some situations, your employer could be operating a PAYE (Pay As You Earn) tax code that assumed your income would be the same for each week or month of the tax year but in reality you are only working for a few months.

Overpayments of tax arise because your overall tax liability is calculated annually. For example, if you get a part-time job for ten weeks that pays you £200 a week, the PAYE system will expect that you will be getting this wage every week of the year and think that you are going to earn £10,400 and will deduct tax accordingly. In fact, you will only earn £2,000 during the tax year – which is less than the current £10,000 personal tax threshold – so if this has been your only earnings during the tax year then any tax that you have paid should be due back to you.

If you have now returned to full-time study and definitely will not be working again before 5 April 2015 (including any part-time or casual employment), you can make an in-year tax refund claim on form P50). You can use HMRC’s tax checker tool to work out how much your refund might be.

Historically, form P50 has been a paper form, but HMRC are currently trialing an online version. We have some concerns about this online form.

Finally, you should be aware that if you make a declaration that you do not expect to work again, but then do, you may pay ‘emergency tax’ for the remainder of the tax year – meaning that you may overpay again. If this is the case then HMRC’s reconciliation system should aggregate all your pay and tax details at the end of the tax year and any further refund should be automatically repaid by cheque provided HMRC have an up-to-date address on file. It is worth checking the address that HMRC holds for you in readiness.

You may also have had National Insurance contributions deducted from your pay. These are not generally repayable but you can check that the correct amount has been deducted.

For more information see our section on claiming a tax refund.

(14-01-2015)