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Eddie | Is it true that a uni student pays a higher rate of tax on a second part time job? |
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Arrain
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Second jobs and the level of tax are often misunderstood.
Everyone (regardless of whether you are a student or not) in the UK under 65 can earn up to £5,225 per year tax free. This is the reason that most people currently have a tax code of 522L - last year it will be £5,035 per year, so most people's tax codes were 503L.
Most people with two jobs earn more than the tax threshold of £5,225, so they pay the full rate of tax on all of the earnings from their second job.
As an example, imagine I have one job (call it Job A) that pays £6,000 a year, and I take another job (call it Job B) that pays £4,000 a year.
On Job A, I pay 0% tax on the first £5,225, and 20% tax on the remaining £775. Total tax is therefore £155.
On Job B, I pay 20% tax on all earnings because I have exceeded the £5,225 threshold through my earnings on Job A. As such, I pay £800 tax on the £4,000 earned in Job B.
In truth, the tax is actually paid on the COMBINED earnings of Job A and B, so..
- The total amount I earn is £10,000 per year
- This exceeds the threshold by £4,775
- I actually pay 20% tax on £4,775 = £955 in total over the year
You therefore don't pay a higher rate of tax - you just exceed the threshold by more and so more tax is due. Hope this makes sense! |
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Al Zymer
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It does not matter how many jobs you have; you have the basic tax-free allowance, then any income above that is taxed. The income from other jobs should be aggregated together. Usually your first employer deducts any tax due, or you may have to claim back if you have overpaid. |
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morriganbella
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Even with 2 part time jobs, you probably are still under a certain salary bracket so that at the end of the year you get most of your money back. you might want to get this checked out with a tax person. The advice should be free. |
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tempest
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I think you are allowed to earn a certain amount before they tax you. But I think they will tax you emergency tax on a second job. I am waiting to find out as my daughter has just got a second job. |
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James B
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Everyone that has answered so far is actually wrong.
The tax free allowance for this tax year is 5225 (http://taxfix.co.uk/tax-rates.html)
Be it for a student or anyone, having a second job will result in that second job being tax automatically at 22%.
The reason that this is done is that it is assumed that if you have a second job you will be earning over the tax free threshold. However in your case, being a student this is probably not the case and as a result you have probably overpaid tax.
Contact the Inland Revenue or use an agency such as http://www.taxfix.co.uk who will help you get back any overpayment of tax.
I hope this helps. |
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purplemoon0101
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Everyone, not just students will pay a slightly higher rate of tax on a 2nd job. It is best to declare to the taxman that the higher paid of the jobs is the first one. |
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Steph j
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Depends how much you earn I think. i dont pay any tax. |
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noeusuperstate
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Only if your total gross income exceeds a certain level (around 30K from memory) will the higher rate tax at 40% start.
The 10p band has now gone so you pay 22% (20% 2008) on earnings above your income tax free limit. If you do not receive other benefits this will is £5,700 I think.
But NI contributions at 10% start at £3,700.
So if you Gross £4K on a part time job you pay will NI but not income tax. If you take a second part time job and earn another £4K then you will pay 10% NI plus 22% on the £2,300 that exceeds the earning limit. This would feel like paying a higher rate of tax which in effect it is, but the technical accuracy declares you are being exposed to a different tax. How ever you view it you pay a lot more tax.
Sorry, the precise figures need checking. They change nearly every budget and I am not sure if the last lot of announcements have been put in place yet. |
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