The Low Incomes Tax Reform Group (LITRG) is reminding students who have been working over the summer to make sure they have not overpaid tax and, if they have, to claim a refund from HMRC.

Victoria Todd, Head of Team at LITRG, said:

“Many students will be coming to the end of the temporary jobs they have held over the summer holidays and although some will continue to work while studying, others will not work again until the Christmas holidays or maybe not until the new tax year. For those students who do not plan to earn a wage in the near future we recommend they investigate whether they have overpaid tax on their summer jobs and put in a request for a tax refund now rather than wait until the end of the tax year for HMRC to perform their annual reconciliation.”

Students are more likely to overpay tax as they usually only work - or earn more - at certain times of the year. The overpayment of tax arises because their tax-free personal allowance is usually spread evenly across the tax year but students may earn more in some months than their monthly personal allowance of £987 and so are taxed through PAYE, even though over the whole tax year they earn less than the annual personal allowance of £11,850.

National Insurance contributions (NIC) are calculated on a pay-day basis and not cumulatively over the tax year like income tax, so it is unlikely that students will have overpaid NICs unless a mistake has been made.

Claiming a tax refund is usually a straightforward process,1 and can be applied for online using your Personal Tax Account.2 You can only claim for a refund during the tax year if you do not plan to work or claim a state benefit within the next four weeks. If this is the case it will help your cash position to have any overpaid tax back as soon as possible.

Victoria Todd said:

”We recommend that students keep all their paperwork, such as payslips, so they can work out and understand their tax position at the end of the tax year. You only have four years from the end of a tax year to request a tax refund so it pays to be organised with your tax affairs. Even if you have claimed a tax refund during the year, you may start a new part-time or temporary job and that may affect your tax position. Often employers will provide payslips and P45 forms online so it is important that you print out all the records you need while you have access to them. You also need to make sure that HMRC have an up-to-date address for you3 - this is easy to change using your Personal Tax Account.”

Useful links:

Top Tax FAQs for Students (freeview)

Students & Tax: adviser guide