ACCA asks summer interns – are you being taxed correctly?
In an increasingly competitive employment market, internships and temporary contracts constitute a very good opportunity for students to gain valuable industry experience and make new contacts during their summer break, not to mention essential funds to spend in term time or while travelling.
But ACCA (the Association of Chartered Certified Accountants) suggests that, while an internship can be exciting and very demanding, it is worth making time to ensure you are paying the right amount of tax to HM Revenue & Customs (HMRC).
Chas Roy-Chowdhury, head of taxation at ACCA, says: “Students working over the summer should make sure they complete a student exemption form – called a P38. Students and employers simply make a declaration on the form to confirm the educational status of the student. Filling out this simple form will ensure that students pay the right amount of tax and won’t be placed on an emergency tax code.”
The tax rules state:
• Interns earning under £5,435 do not have to pay income tax. This personal allowance will change in September 2008 and be back dated to April 2008 to £6,035.
• But those earning above will have to make payments.
• At the time of working, the student must be in full time education and plan to be in full time education by the end of the next tax year – beginning 5 April.
• Students will not have to pay any National Insurance Contributions (NICs) if they are paid less than £105 a week.
• But should the intern earn more than this amount, they will have to pay a National Insurance contribution of 11% on any salary over this amount up to £770 a week or £3337 a month plus 1% on any amount above these figures.
Roy-Chowdhury adds: “The rules only apply to work undertaken over the summer, Christmas and Easter holidays. Fortunately the £5,435 tax year threshold excludes student grants, loans and bursaries.”
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Notes to Editors
1. ACCA is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. We have 325,606 students and 122,426 members in 170 countries worldwide.
2. ACCA believes that globalisation of business requires one set of reporting standards. We favour principles-based, not rules-based standards, which is why we support the worldwide implementation of IFRS.
3. ACCA believes that tax systems should be transparent, simplified, fair and certain.
4. Complying with regulations affects SMEs disproportionately, which is why ACCA urges governments and standard setters to ‘think small first'’
For further information please contact:
For further information, please contact: Chas Roy-Chowdhury, ACCA Head of Taxation phone: +44 (0)20 7059 5976 / + 44(0)7710 707 516 e mail: chas.roy-chowdury@accaglobal.com
Daisy Cross, ACCA Newsroom phone: +44 (0)20 7059 5759 / + 44 (0)7725 498 654 e mail: daisyhelencross@gmail.com