How to do your tax return as a student

How to do your tax return as a student

If you had asked me a year ago how to do your tax return as a student, I would have had no clue! Luckily, the system for paying income tax is easier than you think! For the most part, employers are responsible for deducting income tax from your pay checks but, there are circumstances where you might have to do your own tax return. Keep reading to find out everything you need to know about filing your tax return as a student.

The Basics

https://unsplash.com/photos/8DEDp6S93Po
Source: Unsplash

If you’ve never had to file taxes before, don’t fret, most of us haven’t. For a first, you only owe income tax if you earn, on average, more than £1042 a month. With most uni jobs paying between £8 to 10 pounds an hour, most aren’t making that. For National Insurance, you have to earn more than £190 a week. Being underpaid as a student clearly has its benefits.

How do you pax taxes?

PAYE is HM Revenue and Customs’ system to collect National Insurance and Income Tax. After deducting taxes from employees’ wages, employers use this system to pay. Once you graduate, employers will also deduct student loan repayments and pension contributions.

If you’re self employed, keep reading to find out how to check if you need to pay income tax (and how to do it).

What do you have to pay tax on?

So what do you really have to pay tax on? See below for the listed tax requirements, as stated on the HMRC website: www.gov.uk/income-tax.

  • money you earn from employment
  • profits you make if you’re self-employed – including from services you sell through websites or apps
  • some state benefits
  • grants and support payments made to you or your business because of coronavirus, including the Self-Employment Income Support Scheme, the Coronavirus Job Retention Scheme, the Small Business Grant Fund or the Retail, Hospitality and Leisure Grant Fund – read about reporting coronavirus grants and support payments
  • the Test and Trace Support Payment in England (or the Self-isolation Support Payment in Scotland and the Self-isolation Support Scheme in Wales)
  • most pensions, including state pensions, company and personal pensions and retirement annuities
  • rental income (unless you’re a live-in landlord and get less than the rent a room limit)
  • benefits you get from your job
  • income from a trust
  • interest on savings over your savings allowance

How do you do taxes if you’re self-employed?

https://unsplash.com/photos/JhevWHCbVyw
Source: Unsplash

Ever made money selling clothes on Depop? Set up an Etsy or Ebay account and sold stuff? You could be qualified as self-employed and may have to file a tax return as a student.

To pay taxes as a self-employed person, fill in the Self Assessment tax return and HMRC (Her Majesty’s Revenue and Customs) will work out how much you need to pay.

The deadline to register for Self Assessment is the 5th of October 2022. The deadline to pay the tax you owe is midnight on the 31st of January 2023. Safe to say, you’ve got plenty of time.

Click here to go through the questionnaire and check if you owe additional income tax. Remember though, you’ll only need to send a tax return if, as a self-employed individual, you earned more than £1,000.

What information do you need to do your tax return?

For starters, you’ll need your National Insurance number. For most, this is mailed to your residency when you turned 16. If you never received this, you can contact the HM Revenue and Customs or apply for a National Insurance online. To receive one, you’ll need to have the right to work in the UK.

You’ll also need your Unique Taxpayer Reference (UTR), a 10-digit number. The government will automatically send you a UTR when you register for Self Assessment or set up a limited company.

Lastly, you’ll need your bank statements. These will also need to include income and interest statements from savings. In all honesty, it’s probably best to have everything on hand while you file. Better to be safe than sorry!

Not too scary, right?

Taxes get a bad reputation. They seem way more scary then they actually are. Not self employed? You don’t have anything to worry about then! But at least you know a little more about what your employers are probably going through…Interested in become self-employed? You know exactly what to do once you pass that first £1000 mark!

Got finances on your mind now? Check out our article on everything you need to know on student finance repayment. Wondering if you’re even eligible for student loans? We’ve got the answers.

Leave a Reply

Your email address will not be published.