Wednesday, 21 August 2013
By Amanda Vigar, Managing Partner, V&A Bell Brown LLP
It really does beggar belief that already hard-up students are now in the firing line of yet another HMRC mess. It is summer time and thousands of young people up and down our land are earning a little extra to tide them through their next academic year. The earnings will help pay for mounting tuition costs, books and other course-related material, board and lodging and other ‘essential’ student living expenses…
Now, these hard-working students are faced with the nightmare of having to claim back income tax taken from their wages. They will no longer be able to fill in a simple form to exempt them before their money is taken, but will have to ‘apply’ to HMRC to have their money refunded. Previously, the P38 (S) form, now scrapped, prevented 20% income tax being deducted automatically each month from students, most of whom will earn less than the annual tax-free personal allowance of £9,440. This means anyone earning more than one 12th of the annual allowance each month - or £786 – could well be subject to tax at source.
These new rules are utter madness and will cause much unnecessary worry and hardship among our young people. It’s yet another example of HMRC bureaucracy left to run riot where people are being asked to fill in yet more forms to claim money back that is rightfully theirs. I am already seeing cases where students, who are not the wealthiest section of society by any means, are facing increased financial pressure due to the time it takes to claim their money back.
It is unfortunate to say the least that these measures have been introduced at all. Students now more than ever need to plan ahead when taking occasional work over the summer and budget for not receiving all of their wages for quite some time.
To avoid any issues with getting money back, they should make sure they get a P45 when they finish their job. This will show their PAYE code, total earnings and the tax paid. If they do not intend to work for the rest of the tax year, and have stopped working for at least four weeks, they can claim a refund by filling in a P50, available from HMRC's website. If they continue to work part-time for the same employer during term time - say during weekends only - they should be given a P60 at the end of the current tax year.