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Apprenticeships and Tax: What You Need to Know

By: J.A.J Aaronson - Updated: 13 Apr 2018 | comments*Discuss
 
Tax Income Hmrc Paye Apprentice

No one wants to worry about tax. It is a necessary irritation; something that we all have to do, whether we like it or not.

But despite the fact that it is very few people’s favourite thing to think about, it is important to understand how tax affects you. Apprentices will pay tax on the money they earn just like any other employee. If you are starting an apprenticeship you should ensure that you are familiar with the tax system in order to avoid paying the wrong amount.

There are many common misconceptions about the way in which apprenticeships are taxed. This article provides an overview of the main points you should understand – but if you are in doubt about your tax responsibilities you should make sure that you seek independent advice.

Are apprenticeships taxed?

Yes. There is a common misconception that apprentices do not have to pay tax. This is not the case. Apprentices are employees, and they are treated as such for tax purposes. This means that you will have to pay income tax and National Insurance Contributions (NICs) in the same way as everyone else.

You will normally be taxed through the Pay As You Earn (PAYE) system. Under PAYE tax is deducted ‘at source’ – meaning that it is taken straight from your pay packet. You will therefore not normally need to worry about completing a Self Assessment tax return.

You will be assigned a tax code. This combination of letters and numbers will tell HMRC and your employer how much should be deducted from your pay packet. It is important that your tax code is correct.

How much tax will I pay?

This will depend how much you earn. For the 2017-18 tax year, if you earn less than £11,500 you will not be taxed at all. This is known as your personal allowance. Earnings over the personal allowance will be taxed at a rate of 20 per cent.

If you earn more than £157 per week you will also have to pay National Insurance Contributions. If you earn between £113 and £157 a week, your contributions are treated as having been paid to protect your National Insurance record. As an employee you will pay Class 1 NICs. These are charged at 12 per cent of your income between £157 and £866 per week. Earnings over £866 will attract additional NICs at 2 per cent.

What about students?

Many people believe that apprentices are taxed differently because they are also studying. It is important to understand that apprentices are employees, and they are taxed as such.

It may also be useful to understand that students completing ‘conventional’ courses such as degrees or A Levels also have to pay tax just like everyone else. If they earn more than the income tax personal allowance, or the National Insurance Lower Earnings Limit, they will have to pay. Confusion arises because the majority of students work relatively few hours during term time, and therefore do not earn enough to exceed their personal allowance.

I think I’ve paid too much tax. What can I do?

It is, unfortunately, common for people to pay the wrong amount of tax – and it is a particularly frequent occurrence amongst those who have recently started work.

There are numerous potential reasons for incorrect tax payments. They tend to occur because HMRC does not have the information it needs to correctly calculate your tax payments. In these cases you may have been assigned a so-called ‘emergency tax code’ which could result in you paying too much tax. Alternatively, your tax code might simply be wrong. Your tax code can be found on your payslip. It is important that this code is correct, as it will determine the amount of tax deducted from your pay packet.

If you think you have paid too much tax, you should call HMRC on 0845 300 0627 and explain the situation. They may ask you to send in documents to support your claim.

It is also important to understand that underpayment of tax can also occur when tax codes are wrong. Indeed, millions of taxpayers have received letters in recent months telling them that they have paid too little tax, and demanding that they make extra payments. You should therefore keep track of your tax payments, and make sure that you are not underpaying in order to avoid a nasty surprise further down the line.

Tax affairs can be complicated, particularly if you are entering work for the first time. If you are in any doubt about your tax situation, contact HMRC or your local Citizens Advice Bureau for more information.

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[Add a Comment]
@Lb - they might have got it from your P45 which has all the necessary information on it.
MaB - 20-Apr-18 @ 11:01 AM
If i have never given my employer my ni number can they be paying it ie can they obtain it elsewhere, my employer is telling me they are paying it but i have never been given proof. I earn 150 a week part time work amd i read somewhere anything below 167 you dont pay im just looking for clarification before i challenge employer
Lb - 13-Apr-18 @ 10:46 PM
Emmy - Your Question:
Hi if I'm doing Apprenticeship and earn £122 a month and £1,344 in a year will I be taxed?

Our Response:
You will not be taxed. You have to earn more than £11,850 per annum to be eligible to pay tax on your earnings.
AnApprenticeship - 12-Apr-18 @ 3:28 PM
Hi if I'm doing Apprenticeship and earn £122 a month and £1,344 in a year will i be taxed?
Emmy - 10-Apr-18 @ 4:36 PM
Can I do an apprenticeship course and have a UTR number? Or can I work for a construction firm and still have a UTR number?
sam18 - 22-Mar-18 @ 10:57 AM
Hi. I have been doing an apprenticep for the last 2 years in the plumbing industry my employer is a ltd company but does not have any employees apart from himself and me. My hours and wage vary from week to week and I have never had any pay slips . I’m about to start my 3rd year and the most I have ever earnedis £240 a week. Should I be registered and be paying any tax or National Insurance?? If so , who is responsible for sorting this out. Thank you
Reece - 21-Nov-17 @ 5:34 PM
Becca - Your Question:
Hi, I start my apprenticeship tomorrow. I might be doing 30 hours on minimum wage. I am not 100% sure but what taxes will I be paying and how do I do that?

Our Response:
The standard Personal Allowance is £11,500, which is the amount of income you don’t have to pay tax on. If you think you may earn over £11,500 per annum, then you will pay tax at 20% on any income above this figure.
AnApprenticeship - 6-Nov-17 @ 2:12 PM
Hi, I start my apprenticeship tomorrow. I might be doing 30 hours on minimum wage. I am not 100% sure but what taxes will I be paying and how do I do that?
Becca - 5-Nov-17 @ 8:11 PM
laura - Your Question:
Hello, I'm doing apprenticeships since the end of February. From the first My salary I'm asking my employer to give me payslip. And she is always ignoring that. I'm getting my wages by cash, so I don't know or she is paying my NI or not. Anyway I need P45 and payslip, to send it for Lithuanian taxes. Other thing is, that the company where I'm working doesn't exist. When I had a look on GOV.UK it shows that I'm working in Lithuania shop, not in the hair salon. What should I do?

Our Response:
You may wish to ask your employer directly if he is paying tax and NI on your behalf, if he does not give a satisfactory reponse you would have to ring HMRC to enquire.
AnApprenticeship - 7-Sep-17 @ 10:53 AM
Hello, I'm doing apprenticeships since the end of February. From the first My salary I'm asking my employer to give me payslip. And she is always ignoring that. I'm getting my wages by cash, so I don't know or she is paying my NI or not. Anyway I need P45 and payslip, to send it for Lithuanian taxes. Other thing is, that the company where I'm working doesn't exist. When I had a look on GOV.UK it shows that I'm working in Lithuania shop, not in the hair salon. What should I do?
laura - 6-Sep-17 @ 12:22 PM
Florence- Your Question:
I've just separated from my partner and was due to start a part time apprenticeship (16 hours a week)at the nursery my son will also be attending. I will be paying for his childcare there too.Would I be entitled to WTC? I will only be earning about £150 a month after childcare costs.I'm really panicking now. Many thanks

Our Response:
HMRC say that the hours you work as an apprentice will count as remunerative work for WTC purposes if: you have a contract of employment for your apprenticeship, you are attending a scheme (apprenticeship) where your payment is classed as earnings (as opposed to reimbursement of expenses) and subject to income tax and National Insurance contributions, please see link here . This should help you answer your question.
AnApprenticeship - 3-Aug-17 @ 10:25 AM
I've just separated from my partner and was due to start a part time apprenticeship(16 hours a week)at the nursery my son will also be attending. I will be paying for his childcare there too. Would I be entitled to WTC? I will only be earning about £150 a month after childcare costs. I'm really panickingnow. Many thanks
Florence - 1-Aug-17 @ 5:43 PM
Mazz - Your Question:
Hi if I'm earning £18,000 from an apprenticeship will I be taxed on the £18,000 or will I only be taxed on my earnings after £11,500, which is known as my personal allowance?

Our Response:
You will only be taxed on the amount over and above £11,500.
AnApprenticeship - 17-Jul-17 @ 12:15 PM
Hi if I'm earning £18,000 from an apprenticeship will I be taxed on the £18,000 or will I only be taxed on my earnings after £11,500, which is known as my personal allowance?
Mazz - 15-Jul-17 @ 3:34 PM
hello, I've just started an apprenticeship. i work 37.5 hours a week and earn £693.30 a month then national insurance takes off £2.40. if i got another job at the weekend will i be affected tax wise? if so how much will i be able to earn a week without being affect? sorry, i just really cant work this out
chloooe - 14-Feb-17 @ 3:16 PM
I'm about to start an apprenticeship but I'm also keeping my current job at the same time. Will I get taxed 20% as it'll be classed as a second job?
Lucy - 25-Oct-16 @ 1:58 PM
I have employed an apprentice on a college apprenticeship since April 2015. They were born in August 1997 (17 when they started). I have been paying the Nat Min Apprentice Wage of £3.30 per hour for a 37 hour week. (£120 per week). They walked out after 9 months of a 12 month apprenticeship and are now taking me to a tribunal for not paying PAYE (taxing there income or paying NI). I have tried to explain that they do not earn enough to have tax or NI deducted but they are still taking me to a tribunal. How do I stand. I also thought they had to work for 2 years before they could bring a tribunal case?
JohnE - 24-Oct-16 @ 4:59 PM
Dan - Your Question:
I've been on an apprenticeship since I was 16 doing a plumbing and heating course, I've always been paid cash in hand and had no wage slips. Now I need to look and becoming self employed as I have finished my last course and will be earning more. My employer has never asked for my national insurance number or any other details and I don't know what to do?

Our Response:
If you are an apprentice then you should be down on the company payroll regardless of whether you earn enough to pay tax or NI. It's legal requirement that your wages are paid PAYE. While by law your employer does not have to give you a wage slip, you can certainly ask for one, and your employer is legally obliged to comply.
AnApprenticeship - 18-Oct-16 @ 12:50 PM
I've been on an apprenticeship since I was 16 doing a plumbing and heating course, I've always been paid cash in hand and had no wage slips. Now I need to look and becoming self employed as I have finished my last course and will be earning more. My employer has never asked for my national insurance number or any other details and I don't know what to do?
Dan - 17-Oct-16 @ 8:17 PM
Hi , my daughter has been an apprentice for a year she get her pay directly into her bank account but has never received a pay slip . We checked with the inland revenue and they say that she has never been payed anything on their records ! Is this correct or is her employer doing wrong ?
Becky - 15-Oct-16 @ 3:42 PM
bb - Your Question:
My son works part time and earns £150 per week he starts full time in march for the same amount of money plus £60 cash in hand should he be receiving wage slips

Our Response:
I'm not sure what you mean by 'cash-in-hand'- is this a legal payment? (i.e will his employer be paying tax and NI on this). It sounds like something is amiss with this 'arrangement', he may need to check his new contract to see whether his employer is working within the legal guidelines. Not every employee receives wage slips, but he is entitled to ask for them.
AnApprenticeship - 12-Oct-16 @ 3:02 PM
My son works part time and earns £150 per week he starts full time in march for the same amount of money plus £60 cash in hand should he be receiving wage slips
bb - 7-Oct-16 @ 6:38 AM
Modern apprenticeships is a nicer way of saying YTS. Your child is working for buttons & also parents suffer. The tax officetold me, me as the parent have to lose child/tax benefits so my child to can gain. I will support my child, but doing so life has been harder. I am struggling, shes tired & at 17years of age still really dosent know if that is what she wants to do. Cant wait until aug 2017, it will be finished & lets see if she gets a fulltime with her 18month qualifications. I hope she does, then all the struggling i am doing will be worth it, but it is hard.
Shazza - 7-Aug-16 @ 8:39 PM
Hi there, I'm Dennis, 35, I am about to start a child care level 2 apprenticeship in a nursery, 30 hours per week, but before I start I want to weigh up the pros and cons the apprenticeship pays £3.30 per hour that is£99 per week I am going to be£104 per month worse of compared to when I was on ESA, my tutor told me that is the minimum wage that they can pay but try to negotiate with the nursery, if I am going to be£104 per month worse of is there anything like working tax credits to boost up my income. Thanks
Keane80 - 12-Jul-16 @ 2:22 PM
Hi there, I'm Dennis, 35, I am about to start a child care level 2 apprenticeship in a nursery, 30 hours per week, but before I start I want to weigh up the pros and cons the apprenticeship pays £3.30 per hour that is£99 per week I am going to be£104 per month worse of, my tutor told me that is the minimum wage that they can pay but try to negotiate with the nursery, if I am going to be£104 per month worse of is there anything like working tax credits to boost up my income. Thanks
Keane80 - 12-Jul-16 @ 2:01 PM
JJ - Your Question:
Hi I am doing an apprenticeship on £220 a week after deductions, am I entitled to any fuel expenses etc for travelling to different building sites?

Our Response:
You would have to speak directly to your employer regarding this.
AnApprenticeship - 21-Jun-16 @ 2:13 PM
Hi I am doing an apprenticeship on £220 a week after deductions, am I entitled to any fuel expenses etc for travelling to different building sites?
JJ - 20-Jun-16 @ 11:41 PM
I'm really interested in doing an apprenticeship but I'm worried about child care as I have been told that I will not be entitled to working tax credits whilst doing it (which pays the majority of my childcare fees at the moment) the apprenticeship I am looking into is 40 hours per week and the wages are £138.60 per week. Is it true that I cannot claim working tax credits? Is there any other help towards childcare that I could claim?
Katy - 28-May-16 @ 10:13 PM
I did an apprenticeship from March 2015 - March 2016. Im 21. I earned £9.15 an hour for this (30 hours per week). The tax code was 1060L. Was i taxed correct?
MoMo94 - 21-Apr-16 @ 4:23 PM
Hey I am an apprentice earning 3.30 p/h on a 37 hours p/w contract and I earn £500 roughly per month but I am taxed PAYE and actually only receive just under £400 a month I don't work any other job and i was wondering if this tax is correct as I'm losing out on just over 1/5 of my wages each month
Alex - 15-Apr-16 @ 10:41 AM
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