Student tax exemption to stop next April
HM Revenue & Customs has announced that students will have to pay full Pay As You Earn (PAYE) tax from April 6th next year as real-time information (RTI) is brought in.
As it stands, companies that employ students during the summer, winter or Easter holidays are often able to pay them without deducting PAYE tax, helping those whose earnings are unlikely to exceed their personal allowance.
However, the form that would allow this to happen – P38(S) – will be retired from April next year as RTI is made compulsory for most businesses.
From now on, students will be able to use a P50 form to claim in-year refunds, but the Institute of Chartered Accountants in England and Wales says that this needs further explanation for students who remain unsure about whether they are eligible.
Small businesses that need further advice on student taxes and the introduction of RTI could consult a specialist accountancy service to ensure they are prepared for change.
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