Student PAYE Exemption Goes

28 August 2012

Students who do holiday work will have income tax and national insurance deducted from their wages for holiday work from next April when the government scraps a student opt out for Pay As You Earn (PAYE).

From 6 April 2013, employers must treat students in the same way as all other employees for income tax and national insurance contributions (NICs) purposes.

Currently, employers who employ a student solely during their summer, winter or Easter holidays may be able to pay them without having to deduct PAYE tax. In most instances, however, NICs will still have to be deducted. However, when the real time information (RTI) process rolls out, the paper P38(S) form that must be completed for the student to get this treatment will be retired from 6 April 2013.

The P38(S) form was designed to help students whose earnings for the year will not exceed their personal allowance. With RTI, the student is likely to have tax deducted, although it can be claimed back later using a P50 form if the student does not intend to take on more paid work in the same tax year.

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Daly Park Newry Office

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Northern Ireland BT34 1DN
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