Careers and Employability Centre

Income tax

It is important that you are aware of the deductions that may be made from your wages when you start work. 

What is income tax?

Income tax is your contribution to Government spending. Everyone who earns or receives income over a certain amount in the tax year pays income tax, and the more you earn the more you pay. If you work for someone else, your employer will usually take that tax from your earnings each payday and pass it on to the Inland Revenue. This is known as the Pay As You Earn (PAYE) system. It takes care of your tax automatically and saves you having to pay tax in one go at the end of the year.

Are students exempt from paying tax?

No - students in employment have to pay both income tax and national insurance in the same way as anyone else working in the United Kingdom. How much of your wages you pay will depend upon how much you earn and your tax status e.g. whether or not you have any special allowances.

What do I pay income tax on?

You have to pay income tax on all full, part-time and temporary employment. If you get perks or benefits from your employer these may also be taxable.

How much income tax will I have to pay?

Everyone can earn or receive an amount of income in each year before paying tax. This is called the Personal Allowance and for adults born after 1948 this is currently (2018/19) £11,850. If your income is below that in the tax year, you won't have to pay any tax, (a tax year starts on April 6 in one year and finishes on 5 April in the next).

Tax forms

You will receive a P45 from your employer when you stop working for them. It's a record of your pay and the tax that's been deducted from it so far in the tax year. It shows:

  • your tax code and PAYE (Pay As You Earn) reference number
  • your National Insurance number
  • your leaving date
  • your earnings in the tax year
  • how much Income Tax was deducted from your earnings

If you don't have a P45 because, for example, you're starting your first job or taking on a second job without giving up your other one, your new employer may give you a 'Starter Checklist' to complete. It contains important information that affects the amount of tax you’ll pay, such as whether:

  • this is your first job
  • you've been claiming Jobseeker's Allowance or Employment and Support Allowance
  • you've got another job
  • you're paying off a student loan

The Starter Checklist replaces form P46. The checklist will ask you relevant information before your first payday to tell HMRC about you. It will help your employer to allocate a tax code and work out the tax due on your first pay day.

If you believe you have overpaid tax please contact HM Revenue & Customs

Information for international students

Before you leave the UK, remember to complete a form P85 'Leaving the UK - getting your tax right'. This will allow you to make a claim for any overpaid tax during the year. If you have been here for more than one tax period (the tax year runs from April - April) you can claim for all the relevant tax years using your P85. If you have a P45 from a former employer, you should send parts 2 and 3 to HM Revenue & Customs with your P85.

Information for Sussex student employees

If you are working for the University then you can make enquiries about your wages at the Payroll Office, which is located in Sussex House.

If you are working for the Students’ Union, the USSU finance office is on the top floor of Falmer House.

Useful resources