Student Tax Needs Clarification

Student Tax Needs Clarification

Students – who have traditionally not been taxed for doing summer jobs – are facing confusion on their status because the Government are failing in their political responsibility to roll out announced measures clearly.

In his 2024 budget address the Minister for Taxation the Hon. Nigel Feetham KC MP, indicated he would be removing the blanket tax exemption for student employment income and instead apply the income threshold of £ 11,450 for those students in employment. This change, the Minister stated, was to eliminate what he described as abuse by “owner-managed businesses” but he was clear he did not propose to tax students, however the reality on the ground is that his announcement has caused confusion and unfairness as some students are in fact being taxed.

Roy Clinton MP the GSD Shadow Minister for Public Finance stated the following:

“Reports are reaching us that some students are being taxed on their summer jobs and yet others are not. The law as it stands is the Income Tax (Allowances, Deductions and Exemptions) Rules 1992 which under section 3 (49) (a) exempts ‘income received by a student from employment’. This law has as yet not been changed despite the Minister signalling his intention to do so.

It would appear the Income Tax Office are implementing the intended budget measure without the necessary legal basis. All of this would be unnecessary if the Government adopted a future practice of setting out the measures it is introducing in a Finance Bill at the time of the budget. That would give measures the necessary support without delay or confusion.

The Income Tax Office I understand have been suggesting that students complete and submit an application for low income earners allowance to adjust tax codes so they are not taxed but this is not universally known. Given that students will shortly be returning to study and cash flow is critical to them I invite the Income Tax Office to issue clarification and guidance to employers and students alike as a matter of urgency so as to ensure students are not incorrectly taxed and made to suffer financially.”