Seasonal workers do not work all year round, but rather have a cycle of work in a particular season. For example, picking fruit and vegetables in summer or autumn is a popular seasonal job. Christmas is a busy time of year for lots of industries, so this is also a popular time for seasonal workers to find jobs. However, tax liability can be confusing when you are working a temporary job. Read this guide to find out whether Christmas workers have to pay tax.
How much can seasonal workers earn?
Many seasonal workers are not UK residents. Regardless, any worker who is earning an income from a job in the UK will be liable for paying income tax. Seasonal workers are normally still employees, which means an employer should be paying seasonal workers on their payroll through the PAYE (Pay As You Earn) scheme. If you are a seasonal worker, your employer should deduct any income tax and National Insurance contributions from your pay and pay these to HMRC for you. Income tax is based on your overall annual income and whether it exceeds the personal allowance for tax-free income. The personal allowance for the tax year April 2019 – April 2020 is £12,500.
How much tax do seasonal workers pay?
The amount of tax that a seasonal worker will have to pay depends on the income that they earn. If they earn more than £12,500 over the course of their seasonal work, then this would exceed the tax-free allowance. They would then have to pay tax on any earnings above this amount. This puts them in the basic rate bracket of paying 20% tax. It is not likely that any seasonal workers will earn more than £50,000, which would put them in the higher rate 40% tax bracket. You should only begin to pay tax if you are earning more than £240 per week or £1042 per month. Some workers can claim the personal allowance even if they are not tax residents, including European Economic Area and the Isle of Man or Channel Islands residents.
Can seasonal workers claim tax refunds?
During the course of your seasonal work, you might find that income tax is deducted through PAYE, then find that your total earnings for the seasonal work were less than the personal allowance. In such a case, you should be eligible for a tax refund from HMRC. If HMRC does not contact you or issue a refund automatically, then you will need to submit a form to claim your tax refund. If you are a migrant who leaves the UK after a period of seasonal work, it is likely that you will not have exceeded the annual allowance even if you were taxed on your earnings. This should be refunded when you leave the UK, so you shouldn’t worry about double taxation in your home country.
Do seasonal workers have to pay National Insurance contributions?
National Insurance contributions are assessed per each pay period rather than annually like Income Tax. The thresholds are also different than for Income Tax. Seasonal workers will be liable to pay National Insurance if they earn over £166 a week or £720 per month during the 2019-2020 tax year. Also unlike Income Tax, National Insurance contributions aren’t refundable. You will not be able to claim them back if they were deducted from your pay, even if you were only working in the UK for a few weeks. However, paying NIC could make you eligible for social security benefits. You should be aware that receiving cash in hand for seasonal work is likely to be against the law because you’d be avoiding paying Income Tax and NIC.