Tax and National Insurance
Welcome
Your personal tax situation is your responsibility to maintain.
Employers are given notifications from HMRC on what tax code to operate for an individual regarding their personal situation which HMRC are aware of.
If you feel your HMRC issued code is incorrect, please call HMRC on 0300 200 3300
Welcome
We know that when it comes to finances, things can sometimes feel like a maze of numbers, jargon, and perplexing choices. But fear not, because we're here to help take the stress out of money matters and guide you towards a healthier financial future.
Remember, financial wellbeing is not just about making ends meet—it's about creating a life that's full of possibilities, security, and dreams come true. And with this Financial Wellbeing page, we're committed to making that journey as enjoyable and enlightening as possible.
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What is tax?
Income tax is a tax you pay on your earnings. Each person has an income tax personal allowance, and income up to this amount in each tax year is free of tax.
I am an international student – why have I been taxed?
As an international student who has taken up residency in the UK, you are subject to tax under the same rules and regulations as a UK residence. Broadly, under the UK system you are liable to UK taxation on your worldwide income if you are resident in the UK for tax purposes.
Why have I been taxed (general)?
Your personal allowance (your HMRC issued tax code) will define how much tax you pay and how often. Payroll is not run annually, it is instead run on a cycle set by the employer, such as weekly or monthly. Therefore, any tax-free allowance is shared evenly across the pay cycle.
What is my tax code?
Your tax code is used by your employer to work out how much Income Tax to take from your pay or pension. HM Revenue and Customs (HMRC) will tell them which code to use.
How does my tax code work?
Your tax code is made up of several numbers and a letter.
1257L is the tax code currently used for most people who have one job or pension.
HMRC will usually contact you to explain how they worked out your individual tax code if your tax code changes.
What the numbers mean:
The numbers in your tax code tell your employer or pension provider how much tax-free income you get in that tax year.
HMRC works out your individual number based on your tax-free Personal Allowance and income you have not paid tax on (such as untaxed interest or part-time earnings). They also consider the value of any benefits from your job (such as a company car).
What the letters mean:
Letters in your tax code refer to your situation and how it affects your Personal Allowance.
Letters and what they mean:
L - You’re entitled to the standard tax-free Personal Allowance
T - Your tax code includes other calculations to work out your Personal Allowance
BR - All your income from this job or pension is taxed at the basic rate (usually used if you’ve got more than one job or pension)
If your tax code has ‘W1’ or ‘M1’ or ‘X’ at the end
These are emergency tax codes.
Your personal tax allowance can also be split out between multiple jobs
If you think you are on the wrong tax code you should contact HMRC immediately on 0300 200 3300 to explain your current situation.
Examples of how a tax code works
My Tax Code is 1150L – This means my annual tax-free allowance is £11,500 (1150 x 10)
My employer pays me weekly – This means my weekly tax-free allowance is £221.15 (£11,500 / 52)
How the tax is calculated – The first £221.15 I earn is entirely tax-free, charged at a rate of 0%. Any amount earned above the £221.15 is taxable.
Say I earn £300.00 – I only pay 20% PAYE tax on the difference between my earnings and my tax-free allowance for the week (£300.00 – £221.15 = £78.85), which would generate £15.77 (£78.85 * 0.20) PAYE tax.
The key item to remember is that you don’t pay tax on all the £300.00, just any amounts over and above the allowance.
If you have more than one job, HMRC can take you allowance (1257L) and split it out between your job(s), for example, if you have 2 jobs, HMRC can split the tax code so that in each job your have a fair split of tax free income so each job would see 628L as its tax code.
Pension deductions
Check out our pension page on the staff LUU intranet
What is a National Insurance payment?
National Insurance contributions are a tax on earnings and self-employed profits paid by employees, employers and the self-employed. For most people, it's against the law not to pay national insurance. Unlike tax, National Insurance is non refundable. National Insurance is a fundamental component of the welfare state in the United Kingdom. It acts as a form of social security, since payment of NI contributions establishes entitlement to certain state benefits for workers and their families.
What is a National Insurance Number, how do I get one?
You have a National Insurance number to make sure your National Insurance contributions and tax are recorded against your name only.
It’s made up of letters and numbers and never changes. For example, AB123456C.
You can find your National Insurance number:
On your payslip
On your P60
On letters about your tax, pension or benefits
In the National Insurance section of your personal tax account
If you do not already have a National Insurance number, you only need to apply for one if you’re planning to work.
You can start work without a National Insurance number if you can prove you have the right to work in the UK.
You can apply on line with the following link: