Claiming a Tax Refund As a Student Or Recent Graduate

There’s a popular misconception here in Britain that nursing students are exempt from paying income tax. In this article, we uncover the fact and the fiction behind student nurse taxes, and take a look at how to claim back any overpaid tax that you’ve already paid.

We have a popular misconception here in Britain that nursing students do not have to pay Income Tax – and whilst we hate to be the bearer of bad news, we’re not going to lie. You students are just as liable to pay Income Tax as anyone else in Britain.

The confusion is most likely down to the fact that a great many nursing students earn less than the annual tax-free allowance – the threshold which determines whether you earn enough to have to pay tax in the first place. It’s currently set at a little over £8,000 per year, and with most students earning far less than this figure, the fact that you’re a student nurse is completely irrelevant.

And yet, despite the overwhelming majority of nursing students earning less than £8,000 per year, a ridiculous number of you end up paying too much tax each year.

Nursing students applying to our service have generally paid too much tax for one of three reasons;

– They’ve paid tax on the wrong tax code

– They’ve left a job prior to the tax year end

– They’ve failed to claim the correct nurse tax relief allowances

We’ll cover the issue of tax on savings income in a later article. For now, let us consider the first two scenarios – how they arise, how they can be avoided, and what to do if you’ve already overpaid.

Paying tax on the wrong tax code

This situation often arises where nursing students are holding down multiple jobs. Complications arise because your annual tax-free allowance is not split up and shared across all of your jobs. HM Revenue & Customs generally allocates your tax-free allowance to the first job in full – so the first £8,000 or so that you earn with this employer will be tax-free. But by doing this, none of your tax-free allowance is set against the income on your second job. Any income earned here will therefore be taxed at the full basic rate, and you’ll need to claim it back manually.

If this sounds familiar, it’ll be worth checking the tax codes you’ve been given for each job – whether that’s with the NHS or down your local pub – they should be printed on your pay slip. A ‘810L’ tax code indicates that you are receiving the tax free allowance, and a ‘BR’ tax code indicates that you’re not. If you have two jobs, you’ll probably have one of each.

If your combined income for both jobs does not exceed the tax-free allowance, this situation will almost certainly lead to an Income Tax overpayment and you’ll need to apply for tax relief at the end of the tax year.

If you’re just about to take on a second job, it might be worth speaking to the tax office about splitting your personal allowance between the two of them. If you have an estimate of how much you’ll earn in each job, this arrangement will generally avoid the need to pay any income tax at all.

Leaving your job prior to the tax year end

The second scenario is just as common, and tends to occur when nursing students have taken on full time work over the summer (such as bar work). HMRC rather primitively calculates your tax on the assumption that you’ll be in that same job for the rest of the tax year (i.e. through to 5th April), so when you finish at the end of summer you’ve not earned as much as the tax office had anticipated – and have therefore almost certainly overpaid. Again, you’ll need to claim for nurse tax relief yourself if you want to obtain a rebate sooner than later.

This situation is particularly common for nursing students who take part in summer work placements, where pay tends to be higher than with most temporary summer jobs.

Example

Lets suppose your 12-week nursing placements starts on 1st June, paying 1,500 a month. Throughout the placement, HMRC will tax you on the assumption that you’ll earn 15,000 by the tax year end (1st June – 5th April). When you finish the placement in late August, and have only earned 4,500, it’s almost certain that any tax paid will have been taken in error because your 4,500 income is far less than the annual tax-free allowance.

How to avoid paying tax as a student nurse

If you’re applying for a nursing placement or internship for Summer 2013, or if you’re looking at taking on some part-time work during term time, be sure to provide your employer with a P38(S) form before your first payday.

This is a student nurse tax relief concession, allowing your employer to pay you without tax provided your annual income does not exceed the personal allowance. (Just bear in mind that employers are not obliged to play ball – some are not prepared to process students’ pay separately).

How to get your tax back as a student nurse or recent graduate nurse

If you are studying nursing at university or have graduated as a nurse since April 2007, and have been given the wrong tax code, not worked for the full tax year, or earned less than the tax free allowance (currently around £8000) whilst at nursing college, you can almost certainly claim nurse tax relief from HMRC – right back to April 2009.