Students: Top Tax FAQs for Students

Our top tax tips for students, answering your FAQs.

This is a freeview 'At a glance' guide for students.

Subscribers see also Students & Tax

Employment income and tax overpayments

I have a couple of jobs and I might have overpaid tax. How much can I earn tax-free?

• The tax year runs 6 April to 5 April.
• You can earn up to your annual personal allowance, that's £12,570 for the 2023-24 tax year, tax-free. 

When should I claim a tax refund?

• It is only worth claiming a refund now if you know that you will not be doing any other paid work before the end of the tax year which is 5 April in the UK.
• If you are going to be doing more paid work during this tax year then ensure that you keep all your payslips and if you work for different employers ensure that you obtain a P45 when you leave each employment. 
• If you are still employed at the end of the tax year the employer will provide you with a form P60 and a form P11D if you have received any Benefits in Kind. You can then claim any tax refund due.
• Keep all your P45s, P60s and payslips. 

How do I claim a tax refund if I have overpaid tax?

The simplest thing is to use HMRC's online tool

Last tax year(s)

• If you paid tax in the tax year ending 5 April 2023, i.e. last tax year, you can still apply to HMRC for a refund of tax for that year, you can claim back tax for the last four years if you have not already done so.

When do I have to repay my student loans?

• You do not need to start repaying your student loan until you have graduated or left your course and you have sufficient earnings. The repayment thresholds differ depending on which plan you are on:
  • Plan 1: £423 per week. 
  • Plan 2: £524 per week. 
  • Plan 4: £532 per week. 
  • Plan 5: £480 per week. 
  • Postgraduate loans: £403 per week. 
• For those starting courses from September 2023, there are new structures for repayments:
  
  • Earning levels at which new borrowers start to repay their loans will be set at £25,000 until 2026-27 (currently £27,295).
  • In June 2022, it was announced that the rate on loan repayments would be capped at 7.5%. So now the interest rate is the Retail Price Index (RPI) plus 3% and capped at 7.5%.
  • The student loan repayment term will also be extended from 30 to 40 years for new borrowers.
• HM Revenue & Customs provides a student loan helpsheet that gives you more detail on the repayment of loans.

I am the beneficiary of a trust: do I need to consider tax?

If you are lucky enough to be the beneficiary of a trust you may be able to claim an annual refund of Income Tax.

Contact your trustees who will provide you with an R185 certificate of tax deduction.

You can then use Form R40 to reclaim the trust tax deducted from HMRC. You will be able to reclaim the difference between your own tax rate (assuming you pay tax at all) and the trust tax rate of 45%. If you do not pay tax you should be able to reclaim all the tax paid by the trust on the income you receive.

I am starting my own business: what do I do now?

If you start your own business whether as a student or after you graduate, you will need to register with HMRC and notify chargeability to tax.

You will be fined if you fail to tell HMRC that you are chargeable to tax.

You also need to set up to pay National Insurance Contributions and these are essential in order to ensure that you qualify for state benefits and pension.

See Starting in Business: start here

I have started a business but I am going to be making losses, do I need to register with HMRC?

It is still worth notifying HMRC that you have started a business. You will need to claim that loss on a tax return and then you can offset it against future income. If you have past income, you can carry back losses made when you start a business to the previous four years. See Losses, trade losses and sideways loss relief

I am undertaking a bit of Research and Development (R&D) and I have heard it has some tax breaks. What do you suggest?

Yes, there are some great tax breaks for R&D however you need to be working with or through a company in order to benefit from any R&D reliefs. 

If you are doing R&D with your university it may well have an R&D spin-off company and this base will be covered.

However, if you are doing your own thing, perhaps developing Apps, coding, or whatever then it is worth discussing further where this may lead in terms of tax relief. The key thing with R&D is to define your project and work through the tax outcomes at the start.

Contact VtaxP support if you require any assistance.