University students who carry out part time work to fund the government's top up fees may face fines from the Inland Revenue if they are not careful.

Students will be fined as much as £100 if they work on a self-employed basis and do not register with Inland Revenue within three months of starting.

"The problem is that students just don't realise that they are liable to pay National Insurance Contributions if their income exceeds £89 a week." Said David Rothenberg, senior tax partner at London chartered accountants, Blick Rothenberg. "Many believe that they can deal with this at the end of the tax year but they would be wrong. They need to deal with it immediately. The fine is automatic and comes in three full months after they start work."

David Rothenberg added: " We have already had instances of such fines and as financial pressures grow on students to earn money to fund their studies this is likely to become a growing problem. It won't however arise if they are employed and pay income tax on a PAYE basis.

"Any self-employed earnings are taxable above the tax free rate of £4,615.00 per annum and have to be declared if serious fines are to be avoided."

David Rothenberg said: " It is unfair that a fixed penalty of £100 could arise for unpaid class 2 national insurance contributions of as little as £26, whilst the £100 fine for filing an income tax return late is reduced if the unpaid tax is less."