Are you employing a student this summer?

As the summer approaches some businesses may be thinking about employing students to get them over this holiday period.

Employing a student is a good solution from a payroll point of view because…

If you employ a student solely during their summer, winter or Easter holidays you may be able to pay them without having to deduct PAYE.

In most instances, National Insurance contributions will still have to be deducted.

The rules made simple!

You can pay a student without deducting tax if:

• There are on a UK based course or are a UK national studying a course abroad

• Only work during holidays periods

• Earns less than their personal  allowance

• A form P38(S) is completed and the student fills in the declaration on the form

• In most cases national insurance will still need to be deducted

If they exceed their personal allowance or work at any other time of the year e.g. during term time then you need to account for PAYE as normal.

The rules are slightly different for foreign students and guidance should be sought on this.

Full rules can be found here:

http://www.hmrc.gov.uk/paye/employees/start-leave/special/students.htm

If in any doubt check with your accountant.