Tax Guide For International Students In The UK

How The Double Taxation Agreement Help You

Many students in the UK, who work at the same time, have the impression that their income doesn’t get taxed. But some are actually taxed, depending on various factors.

This is why students who do not fully understand how the UK tax system works and its effect could be at a loss, especially when they are supposedly eligible for a tax rebate. To avoid a similar situation, it is best to understand the basics of the UK tax system that can affect international working students.

Foreign students do not pay tax

  • If their income or gains are spent on necessities, such as course fees, study materials, rent, bills and food.
  • If their home country has a double taxation agreement with the UK
  • If their funds are categorised as financial support, such as family gifts and personal savings made before moving in the UK to study and work
  • If they are sponsored by overseas employers who expect them to work when not studying

In a tax year, international students are allowed to bring in £15,000 or less to the UK for maintenance alone. They can bring in more, but only when it is counted towards course fees.

Foreign students do pay tax

  • If their income exceeds their Personal Allowance
  • If their income is spent on things other than course fees and living costs
  • If their home country does not have a double taxation agreement with the UK
  • If they have other income that they do not bring in the UK
  • If they have other income that they bring in the UK and then spend on other things, not only on food, rent, etc.
  • If they decide to be domiciled in the UK

In both cases, it is clear that Double Taxation Agreement can prove beneficial to students who hail from a partner country of the UK. If the agreement is in place, foreign working students can enjoy the following:

  • Income earned in the UK may be ignored
  • No need to pay tax on any foreign income and gains, such as salary earned back home during a school break or interest on a bank account
  • Foreign income and gains brought in the UK and spent on education and maintenance will not be taxed
  • A student will not be considered a resident even if they stayed in the UK for 183 days or more within a tax year, exempting him from paying taxes

The opposite of all these are what foreign students will experience if their home country has no double taxation agreements with the UK. But not everyone is lucky enough. So, if you come from a place that does not have a similar agreement, you will be taxed the same way with everyone else that comes to the UK.

Studying and working in the UK at the same time is attractive, especially because the country has some of the best universities in the world, and educational support from groups and organisations are not lacking. Moreover, you get to enjoy the VAT Retail Export scheme where you can claim back VAT charged with your purchases.

If you are a foreign resident studying or working in the UK, you can reclaim VAT, but you must prove it to the retailers first. Before you decide to study in the UK, however, you should check if your country has double taxation agreement and consider the

If you have any questions regarding this or any other tax areas then contact our team of agents NOW!


Photo by Element5 Digital on Unsplash

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