Students working in summer jobs may receive a tax bill for the first time after HMRC made changes to how calculations are made.

In the past Students have been able to fill in a P38(S) form to give to their summer employers, which meant they would not pay the basic rate of 20% tax. Most were deemed unlikely to earn more than the personal allowance threshold throughout the financial year when only working over the Christmas, Easter and summer holiday periods.

Now that Real Time Information (RTI) has been established they will, instead, have income tax deducted from their wages in the same way permanent staff do.  From now on it is the student’s responsibility to claim back the tax subtracted from their wages. Students earning up to £9,440 in a tax year can claim tax back by requesting a P45 when the short-term job ends, which will give them the details needed to fill in a P50 form.

An HMRC spokesman explained: “There is no longer any need for the P38(S) form. The new real-time system provides us with up-to-date information, which allows us to correct any overpayments and underpayments of tax much sooner than we have been able to before.”

If you have any students on your payroll then TI Payroll and Accounting can assist in making sure they are paying the correct tax and assist in issuing any forms needed for them to reclaim tax if they are due it.