How students can reduce their tax bill

UK students who have holiday jobs can pay no tax on their earnings by completing a P38(S) form.

Conditions
In addition, the students must meet the following conditions:
- be planning to continue being a student until after 5 April in the tax year
- not have a total income from all sources (apart from student loans, scholarships and educational grants) of more than the personal allowance (£5,035 in the tax year 2006/2007).

Not all employers will be aware of this procedure so students should always take the initiative and ask their employer for the form - it saves the hassle of reclaiming tax at the end of the year.

Unfortunately, there is no exemption for National Insurance Contributions on holiday jobs and no exemption at all for regular Saturday jobs.