How is Taxing Students Fair?

The UK is on a mission to clamp down on the number of emigrants seeking refuge in the country. One method that they’ve using to achieve this is tightening their tax laws. Regardless of whether people are in the country to build a new life, or are only there temporarily to study, the government has decided that they must “demonstrate their contribution to paying taxes and obeying the law if they are to be allowed to remain in the UK”.

There are proposals in a new Finance Bill that will make it very difficult for overseas students in particular to earn money in the UK, as well as when they go home and work during the holidays. These proposals have been severely criticized by the Low Income Tax Reform Group (LITRG) who claim that not only will the new Bill unfairly penalize overseas students who already battle financially, but it will also be a logistical nightmare to implement.

News.taxationweb uses an example of the fictitious student, Henri, to illustrate the impact of the new proposals. Henri is from France and is in the UK to study for three years. He works at a supermarket to fund his education, and is taxed the standard rate for a job such as this. When Henri returns to France for the duration of the summer vacation, he finds himself another part-time job where he earns EUR2500. He pays tax on his earnings in France, but still manages to save a little bit of money and buy some new trainers. When he returns to the UK, the new tax laws stipulate that he needs to declare his new trainers to Her Majesty’s Revenue and Customs (HMRC) so that he can be taxed on what they cost.

In addition, if Henri uses his French debit card to pay for anything while he’s in the UK, like text books, he has to declare that to the HMRC so that he can be taxed again. Henri could avoid paying tax on these items, which are called remittances, if he declared all of his income as regular UK students do. The only difference is that he would have to complete a self-assessment tax return, become an expert on the HMRC’s stance regarding double taxation and residence, and obtain relevant documentation supporting his cause from the French tax authorities.

Apparently all of this was done to “remove the complexities” of being taxed as a foreigner. According to the LITRG, all the HMRC has achieved is a lot more paper work that will almost certainly not help them to collect any more tax. Considering that there are currently 500,000 international students in the UK, all of whom will be very keen to hold on to their money; that sounds about right.

The LITRG also states that the new bill has the potential to become a human rights issue, as the most vulnerable and lowest income earners in society are taxed to within an inch of their lives. The world is particularly sensitive to human rights violations at the moment; we see them in the news every day. Surely the UK would want to distance itself from anything remotely akin to the subject, rather than try to cover their transgressions in “economic migrant policies”. The LITRG is right, the proposals should be rethought.

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