Payslips!

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Why your tax code is a need-to-know 

For some of us, maybe a tax code is that confusing combination of letters and numbers in the corner of our payslip that we generally ignore. For most of us students, we wouldn’t be earning enough in our part-time jobs to pay income tax anyway – the first £12,570 you earn per year is tax-free (called the Personal Allowance) and it’s only over that amount that you start to pay income tax. 

What is a tax code? 

In the UK we work on a PAYE (pay-as-you-earn) system. This means that with every paycheck, your employer is automatically deducting tax on your behalf. Your tax code tells them how much tax to deduct. 

The numbers in your tax code indicate the amount of Personal Allowance, so for someone with the usual personal allowance of £12,570, the code is usually 1257 (with a letter on the end!). The letters also indicate things about your situation, for example, if you have more than one job, if you’re sharing some of your personal allowance with your spouse, or if you are using an emergency tax code (e.g. you’ve just started a new job and they aren’t sure how much to tax you yet!).

You can find your tax code on your payslip, or your P45, P60, and even online with HMRC. 

If you’re self-employed, we’ve provided more information in the links at the bottom of this article. 

What if it’s wrong? 

If your tax code is wrong, one of two things could happen: you could end up paying too much tax and have less money paid into your bank account each month than you should, OR you could be paying too little tax, enjoying your salary now but being hit by a huge bill (which could run into the thousands!) in a few months or years’ time. Neither situation is good. 

You can check whether your tax code is correct by using a tax code calculator, such as the one on Money Saving Expert. This can highlight any obvious problems. 

How can I fix it? 

It is annoying, frustrating, and sometimes very expensive to fix a tax code error, but you should sort it out as soon as possible! 

If you have paid too much tax, you can get the money back! Hooray! You need to let HMRC know, which you can do either online or by phoning them. 

If you haven’t paid enough tax, you will usually need to pay the money back to HMRC. This is often done by HMRC changing your tax code so that you pay more tax in the current year – this extra tax makes up for the shortfall in the previous year(s). 

If it’s a large amount that HMRC can’t get through paying more tax, they will send you a bill, and you can either pay it off in one sum or arrange a payment schedule with them called a “time to pay agreement”. However, if you don’t pay it off in one lump sum you will be charged interest on it and could be charged a penalty for any late payments. It acts more like a loan. 

For more information… 

If you think you’re paying too much tax 

Lots of FAQs for student taxes 

A tax code checker 

Find out if you need to pay tax in your student job 

If you’re self-employed 

Sarah Chitson
King’s Student Money Mentor
Part of Money & Housing Advice

The King’s Student Money Mentors blog shares our students’ personal experiences and thoughts on money-related topics. Any reference, opinions or recommendations on a particular company/brand are only the views of the student(s) who wrote the blog post. King’s College London, the Money & Housing Advice service and the Money Mentor project do not share the views in the blogs nor endorse any of the companies mentioned. Readers should conduct their own research before using any companies mentioned in our blog posts. 

Life after graduation: different types of government support

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Have you ever wondered how the government can help its citizens? Where does the money come from, and in what form it is given? Welfare benefits might not be the first thing that pops up in your mind, but they may be a great source of help for many around you. 

So, what exactly are welfare benefits? They represent money paid by the government to individuals and families in need. Money is usually raised through taxation and can be received by both employed and unemployed people, depending on factors such as personal income or family size. Many people will claim welfare benefits at some point in their life: if they need help to pay their rent while they are looking for work, waiting to start a new job, or are in low-paid work, for example.  

The good news is there are many types of welfare benefits, meaning people in many different circumstances can benefit from them. Let us sum up here some of them:

The main welfare benefit for working-aged people is now Universal Credit, which helps cover living costs and is paid monthly. We also have New-Style Jobseeker’s Allowance (JSA), which is paid to unemployed or part-time employed individuals who are actively seeking work, and the Council Tax Reduction can be claimed by low-income individuals (and by those receiving other benefits) to help pay their Council tax.

Next in line comes the Employment and Support Allowance (ESA), offering financial support to those with a disability or illness that impacts their ability to work. People who have a health condition/ disability which affects their ability to carry out “daily living”/ “mobility” activities may also be entitled to Personal Independence Payment (PIP), offered regardless of whether they are employed or not. It might be useful to know that this last benefit is not means-tested, and can be paid in addition to Universal Credit, New Style Jobseeker’s Allowance, and a few other welfare benefits. 

It might also be useful to know about Carer’s Allowance for people caring for a disabled or ill person, or about Child Benefit if you are bringing up a child under 16 (or 20 under certain conditions). Also, the Bereavement Support Payment is offered to those whose spouse/ civil partner died in the last 21 months. 

Oh, I almost forgot! If you have No Recourse to Public Funds (NRPF), you won’t be able to claim benefits considered public funds (such as Universal Credit or Child Benefit), but there are some benefits which you can still access (New Style Jobseeker’s Allowance, for example). 

Now, it would take too much time to get into detail for all of them, so here are my last tips for you: if you believe you or someone you know might be eligible to receive welfare benefits, go on the UK Government website to learn more about the types of welfare benefits available, eligibility requirements and application steps.  

If you require further assistance, the following charities can provide help: Citizens Advice, Turn2us, Shelter. Meanwhile, the university’s Student Services Online has an article called ‘Claiming welfare benefits when your course ends’, providing information related to help and benefits you may be able to claim after graduation. And most importantly, King’s College London’s specialist advisors can also offer support to welfare benefits-related inquiries. 

Ilinca Olteanu
King’s Student Money Mentor
Part of Money & Housing Advice

The King’s Student Money Mentors blog shares our students’ personal experiences and thoughts on money-related topics. Any reference, opinions or recommendations on a particular company/brand are only the views of the student(s) who wrote the blog post. King’s College London, the Money & Housing Advice service and the Money Mentor project do not share the views in the blogs nor endorse any of the companies mentioned. Readers should conduct their own research before using any companies mentioned in our blog posts. 

Cryptocurrency: The basics, and where to find out more

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Adverts for investing in cryptocurrency are EVERYWHERE – I can’t count the number I have seen at bus stops, in tube stations, and plastered all over the internet. I have plenty of friends who are interested in it, and some who have even invested in it. Cryptocurrency has really taken off over the last few years. But what is it, and what should you consider if you want to invest in it? 

Cryptocurrency is a digital currency, such as Bitcoin and Ethereum, which are traded as an asset – like trading gold or trading stocks. However, because cryptocurrency is not linked to anything physical, the price is completely determined by the mood and trends of other people who are trading it. This makes it an extremely volatile and high risk investment. In the past, the values of cryptocurrency have gone up and down wildly! The value of Bitcoin has historically gone up as much as 65% in one day, and often falls just as dramatically. 

Are all cryptocurrencies legitimate? Definitely not! There are plenty of scam cryptocurrencies out there, and sometimes these scams are backed by well-known celebrities (or appear to be backed by them!). It is so important to do your research to find out if a particular cryptocurrency is legitimate. If it does turn out to be a scam, your money is not protected by the FSCS (like some other investment types are) so you could lose it all. 

There’s also an environmental aspect to trading cryptocurrency. It has a huge carbon footprint because of the way it is ‘mined’ using massive computers. According to Forex, Bitcoin alone is thought to emit 57 million tonnes of CO2 each year – and you would need to plant 284 million trees a year to offset it! That’s potentially a huge contribution to climate change, and another important consideration if you are looking to invest in it. 

If this blog post has piqued your interest to find out more about cryptocurrency, here are some resources you can try: 

A guide produced by the Bank of England

The Times article “Cryptocurrency trading for beginners”

Money Saving Expert article “Should you buy Bitcoin?”

Sarah Chitson
King’s Student Money Mentor
Part of Money & Housing Advice

The King’s Student Money Mentors blog shares our students’ personal experiences and thoughts on money-related topics. Any reference, opinions or recommendations on a particular company/brand are only the views of the student(s) who wrote the blog post. King’s College London, the Money & Housing Advice service and the Money Mentor project do not share the views in the blogs nor endorse any of the companies mentioned. Readers should conduct their own research before using any companies mentioned in our blog posts.