It's a common misconception that studen ts don't have to pay income tax in the UK. Although this is not the case, everyone can earn up to £10,000 a year before paying tax on their salary or savings, so most first-time students are likely to be non-taxpayers. And by following these tips, students can ensure they make the most of their money
Don't overpay
Due to the way tax is calculated, students can accidentally pay too much. This is because students often work much more during non-term time, and less during term time. This can lead to HM Revenue & Customs assuming that a student's earnings will continue for the full tax year and push them over the personal allowance. If they've overpaid tax, they can reclaim it up to six years after the tax year in which they earned the money. And if the bank deducts tax on the interest on their savings or investments, they can claim it back or get an R85 form to get their interest paid in full. This from is available at www.hmrc.gov.uk.
Open an new individual savings account (Nisa)
A Nisa is a tax-free wrapper in which you can save cash and build an investment portfolio up to the value of £15,000 a year. If a student starts investing now, they can set aside money that will stay tax-free even after their student tax perks end. Most students don't have enough spare money to save, but parents can gift them up to £3,000 a year, free of tax, which they can save straight into their Nisa.
Find the best student current account
Most students simply stick to the same bank as their parents, but it could pay them to shop around for the best student account. Most have interest-free overdrafts, but be careful about the rules that apply after graduation. Getting rid of it can be a big shock to graduates, and some let you keep your overdraft for longer than others. Other perks associated with student accounts include free railcards, special discounts and other benefits. Comparison websites such as Moneyfacts.co.uk are good places to start looking.
Apply for bursaries, scholarships and awards
Students in higher education can apply for money directly from their university or college, which is separate from tuition fees and maintenance loans. The key difference is that bursary money does not have to be paid back, so it's well worth having. Each university or college has its own rules about bursaries, scholarships and awards for who qualifies and how much you can get. Students can contact their student support service to find out what's available.
