A blog from Student Money Assistant, Dan.

With many students taking part-time work to help with expenses, you may have recently received your first payslip. These tend to include important information such as hours worked, holiday pay, and any relevant deductions including income tax and national insurance.

What is tax and national insurance?

Income tax and national insurance are usually deducted from your payslip through a system called Pay As You Earn (PAYE), but only on earnings above a certain level. Everyone has a tax-free personal allowance, which is typically £12,570 per year. You pay no income tax if your earnings for the tax year (6^th April to 5^th April) are below your personal allowance. Income over £12,570 and under £50,270 is taxed at 20%, although there are further tax ratesabove this amount. Note that only the income above your personal allowance is taxed, you still maintain £12,570 tax-free.

National insurance is another deduction, separate from insurance tax. In the 2023/24 tax year, you only pay national insurance if you earn above £242 per week (or £1048 per month). National insurance is typically charged at 12% on income between £242 and £967 per week. Unlike income tax, national insurance is charged based on your weekly or monthly income, not your yearly income. National insurance is also charged on a job-to-job basis, rather than your total income.

Tax codes

Another part of payslips that can be confusing is tax codes. Most people will have a tax code of 1257L, but this might not be the case for several reasons, such as if you have more than one job. It is quite common for students to be charged income tax even though their income is below their personal allowance. This is often because they have an emergency tax code due to starting a new job. In many cases, this issue will be resolved automatically in the next payslip or at the end of the tax year, but you may need to contact HMRC directly.

International students

If you are an international student, there are certain restrictions on the number of hours and types of work you can complete. The university has created a comprehensive guide explaining how you can work whilst satisfying the conditions of your VISA.

Support

If you need any support with your money during the year you can contact Student Funding Support by email (studentfunding@warwick.ac.uk) or telephone (024 7615 0096) Monday to Thursday 8.30 – 5.00 or Friday 8.30 – 4.00. Alternatively, you can drop in and see us by going to the Wellbeing Reception in Senate House between 10am and 3pm Monday-Friday.