Do University Students Pay Tax?

In General, University by Think Student EditorLeave a Comment

Moving away to university can be a very stressful time for students, especially when managing their finances for the first time. Getting a job to support yourself is a great strategy, however, it often means students have to pay income tax for the first time. Apart from this, there is also council tax, and many other types that students may suddenly need to understand and pay. Doing this alone and for yourself is hard, and when added to all the other work you must do at university, it can be almost impossible to understand. However, in this article, we will help you to understand the basics of paying taxes in university, and how to negotiate taxes as a student.

Students have to pay some types of tax in the UK, but not as many types as their non-student peers, especially if they are full-time students. They must pay income tax if they earn more than £1,042 a month, not including student loans and bursaries etc. This is usually deducted by your employer along with National Insurance contributions. Students who are full-time do not need to pay council tax, but part-time students usually do have to.

While this should have given you a short answer to your question, taxes are complex and can be hard to understand, so please read on for full information about this topic in the context of university.

Do university students pay income tax in the UK?

Income tax is paid by students who earn on average more than £1,042 a month, which is called the tax threshold. Any less than this is known as “Personal Allowance”, so you do not need to pay tax on it. This is typically deducted straight from your wages through PAYE, or Pay As You Earn, by your employer.

More information on tax brackets and how much you need to pay can be found here in an article from

If you work abroad during the holidays or breaks in university, you normally need to pay UK tax on anything above Personal Allowance. You may also be required to pay National Insurance if you work for a UK employer. If you work for a foreign employer you may need to pay contributions to the country you are working in, but not to the UK.

Foreign students in the UK may have to pay UK taxes if their country does not have a double taxation agreement with the UK. More information can be found on this link, to the government website.

If you are self-employed as a student, you need to fill in a form each tax year with details of your income and expenses. This is used by HMRC, the tax authority, to determine how much tax you need to pay. The form can be found on the government website, here.

If you have paid tax but then stop working part-way through the tax year, you may be able to claim a refund on the extra you paid. Information on this can be found from the UK government, here.

Does a student loan count as taxable income?

Any funding that you receive as a student loan is counted as non-taxable income, which was created by the government to help you to have enough money to live on while you study. Bursaries, scholarships, and grants are included in this non-taxable income.

For more information on student finance, please check out this Think Student article.

This means these incomes do not count towards your personal allowance, as discussed above. Therefore, you do not need to worry about getting a job to take you over the amount of PA, because the job and any other taxable income will be counted separately from non-taxable loans and bursaries. You also only need to declare taxable income when applying for grants and bursaries, so make sure you check the difference before filling in applications.

It is important to mention your student loan if you complete a self-assessment tax return, as you may be charged extra if not. A helpful YouTube video with more information on this can be found here.

Do university students pay National Insurance?

University students must pay National Insurance if they earn over £162 a week in taxable income. This does not change if you are in full-time education. It is deducted alongside income tax from your income and is collected for your future state pension.

More information on student loans and tax/repayment can be found from Think Student here.

Self-employed students need to complete a tax return themselves which includes National Insurance, through a self-assessment tax return each year as mentioned above. You need to tell HMRC if you are self-employed by calling the newly self-employed helpline. You may have to register as a sole trader, or another similar category, depending on your situation, which will affect how much tax you pay.

More information on this can be found in this helpful Studential article.

Do university students pay council tax?

Council tax is charged per household based on the value of the property you live in and goes towards services like bin collection for your local council. Any household occupied only by full-time students is exempt from paying council tax. You only must begin paying in the summer after your final year at university.

A full-time student is anyone studying at least 21 hours a week for over a year. Most part-time students will need to pay but may be eligible for a reduction.

If you are charged as a part-time student when you are full-time, let your local council know in writing and send them a copy of your student certificate to prove your status.

If you live in a shared house, only the non-students will have to pay, which can get expensive. If there is only 1 nonstudent, they will receive a single person discount of 25% off the bill. Keep this in mind if you are not a full-time student when choosing flatmates, as this can cause financial strain and tension in the house.

Other groups who are exempt from council tax include: “overseas partners” of full-time students who cannot legally work in the UK, student nurses, and apprentices. These groups are called “disregarded persons” and may have to apply in order to be exempted, so check out your local council website for more information.

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