INCOME TAX
Taxes are like Alcatraz after lights out. Nobody escapes.

And no matter how many times you flash your NUS card, students are no different. The only change is that although they have to pay income tax, the amount is usually zero. Huh? The difference may be subtle, but paying nothing is not the same as escaping them.

Everyone gets a personal non-taxable allowance - which is the amount you’re allowed to earn before the Government starts taking a cut. Tax years run from April to April (don’t ask why it’s something to do with medieval sheep markets) and for April 2008-2009, the personal tax allowance is £6,035.

So, if in this time you earn or receive income above £6,035, you are supposed to pay income tax although you only have to pay tax on the amount above the allowance, not on the whole lot. The more you earn the more you pay, but at first it’s only 10%.

Loans and grants don’t count as income. Nor do scholarships or bursaries. It's just what you receive from paid work and there aren’t too many students doing full-time courses who’ll be earning more than six grand in a year.

So, if you get part-time work or a vacation job, make sure your boss knows you’re a student. They should have the appropriate forms which you’ll both need to fill in and sign they’re not complicated, for a change, although you’ll need your National Insurance (NI) number (see www.dwp.gov.uk/lifeevent/benefits/ni_number.asp if you’re not sure what yours is).

For temp jobs, the relevant form is called a P38(S) and for term-time work it’s a P46. Where they come up with these crazy names, we’ll never know.

Once you’ve filled in the forms, tax shouldn’t be taken out of your wages. But if you don't do the forms, it’ll be deducted automatically. All is not lost if this happens - you can claim back any tax that you needn’t have paid from HM Revenue & Customs at the end of the tax year. But it’s a bit of a hassle and means it’s in their account rather than yours in the meantime.

The students who are most likely to end up paying more than nothing in income tax are those doing work placements (usually as part of a sandwich course ). What they receive from their employer is subject to tax, although there are sneaky get-out clauses for certain money earned by certain students meeting certain conditions.

It’s one to check out with your students’ union officer or Tax Office www.hmrc.gov.uk for more info. Students with savings or investments might also end up paying tax if the income generated takes them over the £6,035 threshold. Let’s just make that clear for tax purposes, it’s the extra money that the savings earn the interest, or dividend payments, or whatever that counts, not the amount that’s already stacked up in the bank. And if you’ve got enough stashed away to pull in such a vast amount of interest, why not?

If, however, you have smaller savings...

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