Been looking into Student Tax Refunds? As a foreign student, you would think that you would be spared from paying tax until you earn a decent income. Unfortunately, this is not the case, and not knowing the basic tax facts could cost you money.
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How much tax are you liable to pay the taxman?
Anything you earn above the personal allowance is taxable.
That is, if you earn £1,000 over the personal allowance of £11,500, only this amount is taxable at a basic tax rate of 20%. If your income is lower than the personal allowance, then it is tax-free.
Which income is taxable?
Income is either taxable or nontaxable.
The former includes your salary and job perks, such as job-related expenses and bonuses. Some bank accounts and state benefits, such as Jobseeker’s Allowance, are also taxable.
It is important to note that taxable income is counted towards your personal allowance. So even if your primary income is lower than the personal allowance, the extra income you earn could crank it up.
You could end up paying taxes.
Non-taxable income, on the other hand, includes most bursaries, student finance package, and grants and scholarships. It also includes other non-taxable state benefits and interests from individual savings accounts (ISA).
This type of income is not counted towards your personal allowance. You can make a huge interest in ISA and not worry about paying tax.
Can you claim back tax?
Yes, you can reclaim overpaid tax. This is especially true if you’re paid under the ‘Pay As You Earn’ scheme where students are often overtaxed. You can also claim tax over National Insurance which is taken out of your income before you get paid to pay for social welfare.
The rules on tax refund apply to both international and local students in the UK. As for National Insurance, tax back is only possible if you earn below the threshold but are charged incorrectly for NI contributions.
Is there a way to save on tax?
You can save tax if you are self-employed because only your profits are counted towards your allowance. Any expenses spent to complete your job is non-taxable as well.
Even if you are not self-employed, you can still save tax by being diligent in checking your pay slip and making sure that only the right tax amount is deducted from your pay.
Is there a way to make tax-free money?
Get yourself an ISA and you will make tax-free money. You can earn tax-free interest on up to £20,000 annually with this account. Whatever interest you earn and keep from this account will also stay tax-free year after year.
How can tax rules help boost your student finances?
Make sure only taxable income is included in your student finance calculations. Exclude grant, bursaries, and scholarships once you receive funding or your student loan. Get everything in writing to know where you stand on student taxes.
It would also help if you avoid the following tax pitfalls:
- Not knowing what is taxable and non-taxable income from self-employment, including making money online.
- Not knowing if tax treaties exist between the UK and the country you are domiciled, resulting in you paying tax for money earned overseas.
- Not keeping notes when paid in cash or declaring cash earnings in tax return.
- Not paying HM Revenue & Customs the correct tax amount.
Apply for International Student Tax Refunds
If You Are Looking For More Information On Student Tax Refunds You Can Contact Us Here. Or for more information visit www.taxback.co.uk