Students Pay Levels

Published 22 September 10

Paying students, trainees & apprentices

The Agricultural Wages Order stipulates pay levels, holiday entitlements and other rights for young people, students, trainees and apprentices employed on farms. Those not directly employed in agriculture may still be covered by minimum wage legislation.

Trainees and apprentices, in particular, are subject to specific regulations regarding their pay and conditions. For detailed information on this matter, the AWO can be viewed here

In Scotland:

In Northern Ireland:

Tax and National Insurance

Students are likely to be still liable to pay tax on their income unless all of the following apply:

  • They are studying full-time in the UK, working only in the holidays.
  • They are returning to full time education after the holidays and plan to continue being a student until after 5 April next.
  • Their total income for the year apart from student loans, scholarships and educational grants is below the Personal Allowance.

If a student on a UK-based course is employed at any time other than their normal holiday periods (or if that student is employed both during and outside their holidays), then the normal PAYE procedures used for any other employee should be used. But if a student is employed solely during their summer, winter or Easter holidays, it may be possible to pay them without having to deduct PAYE tax, as long as their earnings remain below their Personal Allowance for the tax year. In most instances, National Insurance contributions will still have to be deducted if students earn more than a certain level.

In order to pay a student without deducting PAYE tax, the employer needs firstly to obtain a form P38(S), which is completed by the student at the commencement of work. The employer's statement on the P38(S) is only filled-out either when the student's period of employment with them ends, or at the end of the tax year on April 5 if that date falls during the Easter holidays and the student continues working beyond it.

As soon as the earnings of a P38(S) employee go above their Personal Allowance, a form P46 must be completed PAYE tax will need to be deducted from their wages. These deductions must also be recorded on a form P11. If no PAYE tax has to be deducted, it will still be necessary to complete a form P11 for any P38(S) employees whose earnings exceed the National Insurance lower earnings limit.

Further advice on the tax implications of employing students can be found here

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