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Students and School Leavers

Students

I am a placement student - what is my position?

The pay you get during practical training from an employer is taxable.

Do I get any Tax Allowances?

If you live in the Isle of Man you will be entitled to claim the same personal allowance as any other Manx resident. The amount will depend on your personal circumstances, e.g. whether you are married and living with your wife or not etc.. Personal Allowances are the amount of income a person can receive before paying tax at the standard rate of 10% and the subsequent higher rate of 18%.

If you do not live in the Isle of Man, you will be granted the non-resident allowance. In any week or month, depending on the pay period, that your earnings exceed your code you will have tax deducted at the higher rate of 18 % applicable to a non-resident.

What about Covenants?

A Deed of Covenant is a legally binding undertaking whereby a person, usually a parent or grandparent, promises to pay an amount to a student, son/daughter, grandson/granddaughter, aged between 18 and 25 and in full-time higher education. A Deed of Covenant may also be made if the student is aged between 16 and 18, they meet all the conditions and their course fees are paid by the Department of Education.

Covenants made to you are liable to income tax and must be declared on your return form. They form part of your total income and need to be taken into consideration when deciding what code is appropriate to you. The person making the payment can claim a corresponding amount as a deduction from income tax, which has the effect of reducing the amount of income tax they pay.

What should I do if I get a holiday job and live on the Isle of Man?

If your total income (including earnings, employment benefit and interest received etc.) in the whole tax year is likely to be less than the single person's allowance, you should contact the Income Tax Division to request and complete forms T18 and R104, both these forms are available for download here. Your employer will then be issued with code NT which will mean that you can then be paid without any deduction of tax. If your taxable income is more than the personal allowances you will have to pay tax on the differences between the two amounts.

What happens if I claim benefit whilst unemployed during a vacation?

No tax will be deducted from your benefit but you must declare it on your return form because this benefit is taxable

School leavers

Do I pay tax on everything I earn?

Everyone can earn or receive a certain amount of income without paying tax. This is called the personal allowance. The amount will depend on your personal circumstances, eg whether you are single, married and living with your spouse, a single parent or not, etc. Personal allowances are the amount of income a person can receive before paying tax at the standard rate of 10% and the subsequent higher rate of 18%.

Can I claim expenses?

The cost of tools or protective clothing used at work can sometimes be claimed for if they are not provided by your employer. You cannot claim for National Insurance contributions or the cost of travelling to and from work.

When do I start to pay income tax?

You will probably start to pay tax when you get your first job. If you go straight to a job when you leave school, you should contact this office as soon as possible and ask for a School Leaver – Personal Details Form (T18). A notice of coding can then be issued to you and your employer. If you do not complete one of these forms the amount of income tax deducted from your wage or salary might be incorrect.

Will I have to complete a tax return?

If you live in the Isle of Man and you are aged 16 or over you will be sent a return form for each year that you are resident here. You must fill it in properly and return it to the Income Tax Division.

If you live in the Isle of Man and you are aged under 16, you will not have to complete a return form unless ITIP has been deducted or you have other income.