If you have a second job or you’re about to get one, you might be interested to know how your tax will be affected. Will getting an extra job complicate things or will it be easy to deal with? This article aims to give you all the answers you need.
- How Much Tax to Pay for a Second Job
- Do You Pay National Insurance on a Second Job?
- How Do I File my Taxes if I Have Two Jobs?
- Tax Codes for Second Jobs
- Self-Employed as a Second Job
- Second Jobs and Pensions
How Much Tax to Pay for a Second Job
Before you start a second job you will need to make sure you are being paid minimum wage or more for both jobs. You also need to understand the terms on both of the contracts. Finally, you need to understand the impact that having two jobs can have.
HMRC will look at one of your jobs and consider it to be your main income. Your main income is where you get your personal allowance. This is the amount that you can earn before you pay tax. When you have a second job your new income will be added on top of your personal allowance. This means there is no personal allowance for your second job.
You might think that you’re going to be taxed more on your second job. However, if you add both of your earnings together you will pay just as much tax as you would if you earned the same money from just one job. The amount of second job tax that you pay on your second job will depend on how much money you are paid for each job. However, if your first job does not make enough money to reach passed the personal allowance, the tax rate for your second job will be 20%.
Do You Pay National Insurance on a Second Job?
When you start a second job you will have a P46 which shows that it is your second job. National Insurance is applied to each job separately. What this means is that if that job earns you less than the threshold you will not pay NI on it.
How Do I File my Taxes if I Have Two Jobs?
When it comes to filing your taxes, it’s not hard if you are employed. This is because all the information will be on the PAYE (Pay as you earn) system. If you are self-employed you will need to declare this through a self-assessment. This means you will have to make sure you know how much you earn between the 6th of April in one year to 5th of April the next. You will also need to make sure that you have calculated your tax bill by 31st January.
To file your taxes, you will need a tax code that’s supplied to you by HMRC. You will also need invoices and receipts that match your bank statements. Finally, you will need to have some sort of digital software, such as Billomat, that can help you to work out your taxes.
Tax Codes for Second Jobs
You will need to make sure that you check your tax code. Failing to do so could result in you having to pay penalties. If your first job pays you more than the personal allowance your tax code should be 1250L. Your second job will have a different tax code. The code could be
- BR = Basic Rate
- D0 = Higher Rate
- D1 = Additional Rate
You can find your tax code on your payslips and you can inform HMRC about starting a second job using the new starter checklist from your new employer. The codes BR, D0, or D1 will be used when you complete your Self-Assessment tax return (if applicable).
Self-Employed as a Second Job
If you are self-employed as a second job, you will have to pay tax if your second job takes you above the personal allowance. If your second job does not take you above the personal allowance threshold, you can split it between both jobs.
If you are self-employed as a second job you will need to declare this through a self-assessment. This means you will have to make sure you know how much you earn between the 6th of April in one year to 5th of April the next. You will also need to make sure that you have calculated your tax bill by 31st January.
Second Jobs and Pensions
If you take a second job, there is always a chance that you will pay money into a pension scheme. However, you should make sure that you are aware of any pensions that you have paid into. If you pay money into a pension as part of your second job you might want to consider adding the funds to a larger pension. You might be able to do this when you leave your second job. Please make sure you are paying the correct tax code, especially if you are already receiving a pension.