From 6 April 2013, Form P38(S) will be withdrawn and students will be treated in the same way as all other employees for PAYE tax and NICs purposes.
Currently, if you employ a student (who is on a UK-based course) solely during their holidays, and as long as their earnings remain below their Personal Allowance for the tax year, you can pay them without having to deduct PAYE tax. In most instances, National Insurance contributions (NICs) will still have to be deducted.
If you employ a student at any time other than their normal holiday periods then you should operate the normal PAYE procedures used for any other employee.
For further information regarding this or any other PAYE issue, please do contact us. Email email@example.com if you would like to discuss your own situation.