Employing a Student | Correct completion of P38(s) | Tax Codes for Students

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Taxing Students is something that is done incorrectly by many companies. There is a common held belief that students don't need to pay any tax, and so a P38(S) is completed and the employee is put on an NT tax code. Some people use the tax code "NI".  This code should never be used, only NT should be used.

 

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Getting it right

The correct way to do things is to answer the following questions:

  • Is the employee working during term time?
  • Is the employee leaving full time education before 5th April next year?
  • Is the employee in part time education?
  • Will the employee earn over the Personal Tax Allowance of £6475 this year (correct for 2010-2011)

If the answer to any of the above questions is "Yes" then they will need to provide a P45 or P46 as normal.

Why the difference?

The concessions for Students to not pay any tax are for those who are in full time education (Open Learning / Home Study not included), who will still be in full time education at the end of the tax year, who won't earn over the PTA and who will not do any paid work during term time. This means that if they only work for you at half term or during School / College / University holidays, you can ask them to complete a P38(S).

Everyone else needs to pay tax as normal.

You can get the P38(S) form for them to complete here:

Student Declaration Form P38(S)

Last modified on Thursday, 09 December 2010 13:27
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