Student Tax
Currently, students who are employed solely in the Summer, Christmas and Easter holidays can complete form P38(S) which allows them to be paid without the deduction of Income Tax. The introduction of RTI (Real Time Information) will mean that the P38(S) will not longer be available. This is because the P38(S) allows for a tax indicator of NI or NT which does not produce a tax code. Within the RTI regime, the completion of the tax code field is mandatory. Any employer currently within the RTI pilot scheme who has student employees who have signed the P38(S) must effectively make the student a leaver at the date of entry into the RTI Scheme and issue a P45 with a tax code of NT. They can then be re-employed in the same way as a normal employee and should complete a form P46.
All employers will be part of the RTI scheme in 2013-14 . The P38(S) will therefore be completely abolished at the start of that tax year, and student employees should be treated in exactly the same way as other employees for the purposes of Tax and National Insurance.