Tax For International Students

Tax For International Students
Figuring out the tax system in a new country is difficult but figuring it out whilst working part-time and a full-time degree can be a real challenge! However, the tax system in the UK is quite nice for students as in the majority of them not being required to pay tax. With the recent tuition fee increases, more and more students are turning to part-time jobs to meet the rising costs of studying in the UK. Students, just like everyone else, are liable to pay both income tax and national insurance contributions on any money they earn from these part-time jobs. However each resident, regardless of occupation or educational status, is eligible for an income tax-free personal allowance which for 2011-12 currently stands at £7,475.

Whilst student tax refunds are often overlooked by students themselves, many that are familiar with the process believe that being a student automatically entitles you to a tax refund. However, whilst virtually all students who are working part-time are able to claim back all the tax they have paid on their earnings, it is nothing to do with the fact that they are students but simply that the amount of hours and the types of jobs they are able to do alongside their studies, make it unlikely that they are able to earn above the £7,475 limit.

Most students will only work a few hours a week or perhaps even only during the summer months when they don’t have classes, so it is unlikely that they will reach the tax threshold set by Her Majesties Revenue and Customs. For example, if you only worked three months throughout the year and get paid an average of £2000 per month, you would not be liable to pay any income tax on those earnings. In most cases the tax will be deducted automatically before you receive your pay, but if you do not exceed the personal allowance threshold in that year then you are able to reclaim these tax payments.

You may be reading this thinking “I wish i’d known that when I was a student” but all is not lost - even if you have graduated, you can still claim up to 6 years in arrears. You can even claim tax refunds if you are a foreign student working in the UK. However, the tax threshold can change from year to year (it has increased by £1000 since 2009/10) so it is important to keep track of what the current personal allowance is.

The actual process of claiming itself can be somewhat of a frustrating process which is why many students choose to appoint a “tax agent” to take care of making the claim on their behalf. Those that opt to submit their application for a refund themselves, will send numerous documents such as P45’s, P60’s (given to them by their employer). For more information on what you need to send or for details on current personal allowances, you can visit the HMRC website.

« Banking for International Students

Student Loans For International Students »