Banks, Benefits and Tax

Banks, Benefits and Tax



You can open a student bank account in nearly all banks and these accounts offer interest-free overdraft facilities for most full-time students. Note, your student finance must be paid into this account. 

Shop around when choosing your bank, find out how soon you will be expected to clear your overdraft when you graduate and how much interest will be charged if you exceed your agreed overdraft limit. Don't be tempted simply by the free gifts on offer.

To help you decide, check out the student banking survey results from "Save the Student" at:

You can also find information on the best student accounts at:


Income Tax

When you are working whilst a full-time student your employer will ask you for a P45. If you have worked before commencing your studies you should have a P45 to give your new employer. If you do not have one, ask your employer for a P46 to complete a starter checklist for HMRC (which replaced the P46)to ensure that you do not pay too much tax.

Keep records of holiday work and retain your P45 to pass on to your next employer.

If you work during term time, you will have to pay tax if you earn over the personal allowance in a week, even if you don’t expect to earn over your personal allowance over the financial year.

If you have more than one job but think that your total income is going to be less than your personal allowance ask HMRC to split your personal allowance between jobs so that you don’t pay tax.

The personal allowance before tax is due is £11,850 pa for most people. Any over-deducted tax will be refunded to you later. If you think there may be an error in your tax deductions, and you want to make sure that the Inland Revenue has the correct details, you can complete a form P91 to ensure that you pay the correct amount.

Remember if you do pay too much tax you can claim it back from the tax office; your employer will have the address. Employers are required to send a form P14 to HM Revenue and Customs at the end of the financial year to enable any overpaid tax to be refunded to you.

For more information see HM Revenue and Customs website: or telephone HMRC on 0300 200 3300. Part-time or vacation work does not affect full-time student support.


National Insurance

National Insurance contributions will be deducted by your employer if you earn over £162 per week.


Social Security Benefits

Students receiving means-tested benefits should note that up to £3,680 of the Maintenance Loan  is disregarded by the Department for Work and Pensions when calculating income-related benefits. However the balance of the student Maintenance Loan is taken into account for means-tested benefit purposes during the period for which it is due, but not the summer break. Those students with an entitlement to Income Support should make sure that their payments are re-instated during the summer vacation.       

The relevant amount of Maintenance Loan available to you will still be taken into account when calculating benefit entitlement, even if you choose not to take out the loan.  Payments received from Student Finance England that are not for everyday living costs, but are for course related costs such as childcare grants, or help with books or travel, will be disregarded for benefits purposes.

HM Revenue and Customs disregards most student loans and grants for Tax Credit purposes.  For more details contact your local benefits office, HM Revenue and Customs, or the Citizens’ Advice Bureau.