Starting a new job? You will be charged the basic rate of tax if you earn under £40,835 and it is currently set at 20%.

Your employer will usually take Income Tax from your wages throughout the year and send it to HM Revenue & Customs (HMRC). This is called the Pay As You Earn (PAYE) system of collecting tax.

However, if you’re starting your first job and you don’t have a P45, your employer will give you a P46 instead. They’ll also allocate a tax code to you and work out the amount of tax you should be paying. Then, HMRC will process your P46 and, if necessary, change your tax code.

It’s all pretty mundane stuff, but it’s important that you get your P46 handed back to your employer as soon as possible. Until your correct tax code is sorted out, you’ll be placed on a temporary, ‘emergency’ code.

And if you end up paying too much tax while under this temporary code, you’ll have to try and claim a refund from HMRC. Not ideal at a time when every penny counts!

 A helpful beginners guide to tax

 Please read the full article What every graduate should know 

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DO: Make a weekly budget. It may seem square, but sitting down with a pencil and a calculator at the start of the year and figuring out how much you’re going to get from loans, part time work and parents and then dividing it weekly will at least give you a rough idea of how much you can afford to spend each week.

DON’T: Lend money to other students, or borrow money from other students. You may never see your money again, or you might not be able to pay it back causing unbearable tension.

DO: Pay with cash! It’s much harder to part with the cash in your hand than a piece of plastic.

DON’T: Try and compete with better off students (or more likely reckless spenders).

DO: Get a summer job! Preferably one that relates to your degree/career interests.

DON’T: Assume your student loan will magically appear, keep checking online and follow up with phone calls if necessary.

DO: Make sure you sign a P38(A) form when you get a summer job. As long as you earn under £5,235 you won’t have to pay tax. Claim back any you may have paid erroneously. You will however still have to pay National Insurance at a rate of 11% of any earnings over £100 a week.

DON’T: Keep all your money in one, low rate current account; put a good chunk of your money into a high interest savings account. Not only does it have the potential to make you money, if you can’t physically see it in your current account you’ll be less likely to spend it.

DON’T: Be afraid to ask shops and businesses if they can offer any student discount.

Please read the full article A foolish guide to student finance.

Brought to you by the lovemoney.com team.