Tax and National Insurance

Everyone working in the UK whether it be home student or EEA students and International students is liable to pay National Insurance and Income Tax. The amount payable for these is dependent on the amount you earn. Please note that having a National Insurance number and a tax code does not mean you have permission to work.

Income Tax

Income tax is paid by everyone, including students, who earn over a certain amount. Everyone has a personal allowance, which is an amount you can earn without having to pay tax. Student income, such as Maintenance Loans and Grants, are tax free and do not form part of your Personal Allowance.

In 2017/18 tax year, the standard personal allowance is £11,500 before you start paying tax on your income. Income above this is charged as follows:

Earnings between £11 501 - £45 000 - 20% deduction of your gross pay above £11 500

Earnings between £45 001 - £150 000 -  20% deduction of gross pay between £11 501 and £45 000 and 40% deduction of your gross pay over £45 000

Earnings £150 000+ - 20% deduction of gross pay between £11 501 and £45 000, 40% deduction of your gross pay between £45 001 and £150 000 and 45% deduction of your gross pay above £150 000

Emergency Tax is payable if your employer does not have your tax code and assumes basic rate allowance, all at 20%. This is payable on all income, but you can receive a refund if you have paid too much.

National Insurance

National Insurance (NI) contributions help you to build up entitlement for some state benefits including retirement pensions. It also helps pay for the National Health Service.

If you are working in the UK, you will pay National Insurance Contributions from the age of 16 until you reach retirement age. You start paying NI contributions once you start earning more than a certain amount.

Earning under £157 per week – You will not have to pay National Insurance contributions

Earning £157 - £866 per week – You will pay 12% of your gross pay

Earning over £866 per week – You will pay an additional 2% of your gross pay

Your employer will deduct your National Insurance contributions from your wages automatically and will pass this on to HMRC along with your tax.