Student Tax Guide: Are You Overpaying? Step-by-Step Advice to Claim Your Refund

Tax can be confusing at the best of times, and when you’re a student juggling a part‑time job, it can feel even more daunting.

According to our latest National Student Money Survey, 58% of students work alongside their degree, while 7% are self‑employed. Understanding how much tax you should be paying is essential – and if you suspect you’ve overpaid, it’s worth checking whether you’re due a student tax refund.

The good news: reclaiming your money is simpler than you might think. And if you’ve already graduated, you haven’t missed your chance – you can claim back overpaid tax as far back as the 2022/23 tax year.

What’s inside this guide?

• Do students pay tax?

• What is the tax‑free Personal Allowance?

• How to claim a student tax refund

Do students pay tax?

Although full‑time students are exempt from Council Tax, income tax still applies to your earnings. However, the way students typically work – in short bursts or across tax years – often leads to overpayment. You could be one of the hundreds of UK students who leave money unclaimed each year. Imagine what you could do with that extra cash!

What is income tax?

Income tax is the amount deducted from your wages (including your part‑time job). If you’re paid through PAYE (Pay As You Earn), your employer deducts tax automatically – you’ll see the figures on your payslip. If you’re self‑employed or have other income, you’ll need to complete a Self‑Assessment tax return each year.

Why students commonly overpay

There are several reasons why students often pay more income tax than necessary – sometimes without even realising it.

• Emergency or incorrect tax codes – When starting a new job, if you don’t provide a P45 from your previous employer, HMRC may place you on an emergency tax code, which can mean you pay too much.

• Work spanning two tax years – Placement years or holiday jobs that cross the April‑to‑April tax year can confuse HMRC’s systems.

• Monthly earnings spikes – Even if your total annual income stays below the Personal Allowance, working extra shifts during busy periods (e.g., Christmas) can push your monthly earnings over the threshold. HMRC taxes you as if that month’s pay were your regular monthly salary, leading to over‑deduction – but you can claim it back.

What is the tax‑free Personal Allowance?

Image: Piggy bank with glasses – Credit: TierneyMJ / Shutterstock

By law, you can earn up to £12,570 in a tax year without paying any income tax.

This allowance shrinks by £1 for every £2 you earn above £100,000, and disappears entirely once your income reaches £125,140 or more.

Above the Personal Allowance, the rates depend on where you live in the UK.

For England, Wales and Northern Ireland, the basic rate of 20% applies to income between £12,571 and £50,270. The higher rate of 40% kicks in on earnings from £50,271 up to £125,140, and any income above that is taxed at the additional rate of 45%.

Scotland has its own progressive bands: after the same £12,570 Personal Allowance, the starter rate of 19% applies up to £16,537, followed by the basic rate of 20% on income up to £29,526, an intermediate rate of 21% up to £43,662, a higher rate of 42% up to £75,000, an advanced rate of 45% up to £125,140, and a top rate of 48% on everything above that.

These rules also apply if you work temporarily abroad over the summer – as a UK resident, you usually pay UK tax on that income. It’s wise to check with HMRC before you go.

Alongside income tax, you’ll pay National Insurance (NI) if you earn more than £242 per week (equivalent to £12,570 a year). Since July 2022, this threshold matches the Personal Allowance. Overpaid NI can also be reclaimed, though the process is slightly more involved – you can use HMRC’s online tool for guidance. Remember, NI contributions fund the NHS and State Pension, so they’re not lost forever.

If you’re self‑employed, don’t forget to complete a Self‑Assessment return – we have a separate guide to help you with that.

How to get a student tax refund

Unless you’re self‑employed, your employer handles tax payments through PAYE. You can track deductions on your payslips.

Sometimes HMRC will send you a P800 tax calculation if they notice a change in your circumstances. If you’re owed a refund, they’ll tell you how to claim online or send a cheque. But you don’t have to wait – being proactive can speed things up.

Here’s how to claim in different situations:

1. You’ve overpaid in your current job

If you’re still working and spot an overpayment, it’s likely due to an incorrect tax code. Check your correct code online, then contact HMRC to update it. If you’re due a refund, your employer will include it in your next pay.
At the end of the tax year, your employer will also give you a P60 form showing your total earnings and tax paid – a handy way to double‑check.

2. You’ve overpaid in a previous job

When you leave a job, you’ll receive a P45 (your employer must provide one). This shows your taxable pay and tax deducted for the year. Use it with a tax calculator to see if you’ve overpaid.
If you have, you can claim online if you have your employer’s PAYE reference number (found on the P45) and details of your income. Alternatively, call HMRC with your National Insurance number, income details and P45 – they’ll guide you through the rest.

It might seem like a hassle, but once that hard‑earned cash lands back in your account, it’ll be well worth the effort.

Did you know all these basic tax facts? A little time spent now could save you from waiting months for a refund – and put money back in your pocket sooner.