Students – claiming a tax refund

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The Low Incomes Tax Reform Group (LITRG) is reminding students who have been working over the summer to make sure they have not overpaid tax and, if they have, to claim a refund from HMRC.

Students are more likely to overpay tax as they usually only work – or earn more – at certain times of the year. The overpayment of tax arises because their tax-free personal allowance is usually spread evenly across the tax year but students may earn more in some months than their monthly personal allowance of £987 and so are taxed through PAYE, even though over the whole tax year they earn less than the annual personal allowance of £11,850.

National Insurance contributions (NIC) are calculated on a pay-day basis and not cumulatively over the tax year like income tax, so it is unlikely that students will have overpaid NICs unless a mistake has been made.

Claiming a tax refund is usually a straightforward process, and can be applied for online using your Personal Tax Account. You can only claim for a refund during the tax year if you do not plan to work or claim a state benefit within the next four weeks. If this is the case it will help your cash position to have any overpaid tax back as soon as possible.

As with all of our tax tips and web pages this information is necessarily summarised and of a general nature.  If you would like detailed specific advice please contact us.