Tax free earnings for teenagers capped at £1,000

Thousands of young people who have finished their exams need to be aware that they may have to declare income to the tax man and pay National Insurance contributions on summer jobs

Teenagers who want to make money after finishing their examinations have traditionally turned to retail or hospitality. Part-time jobs, on the other hand, can be hard to come by in both industries, which have been struck hard in the last year and a half.

More and more young people are looking at the opportunities to earn money created by lockdown. This could include pet sitting or walking for those owners who are now going back to work and having to leave their pets alone all day, gardening work for those who have grown to appreciate their outside space even more or offering tutoring to younger children who may have suffered during home learning.

There are tax implications for part-time jobs ‘Young people are using their initiative and coming up with ideas for part time work, but by doing odd jobs they will in fact be self-employed for tax purposes,

Do teenagers have to register as self-employed?

The good news is they can earn up to £1,000 per tax year without having to worry about the tax man, but if they are lucky enough to earn more than £1,000 in a tax year, working as freelancer, they will need to tell HMRC.

‘It is also worth remembering that the number of “qualifying years” you have for National Insurance purposes determines the level of state pension received. In order to have a “qualifying year” anyone 16 and over would need to pay Class 2 National Insurance if they are self-employed or be employed and earn at least £120 a week.

‘The number of teenagers thinking about their state pension are probably few and far between, but in the future, they may be pleased they actioned this.’