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With the rising cost of living in the UK, taking second jobs may be a necessity for some to make ends meet. If you are wondering how much tax do you pay on a second job and whether having extra income makes you pay more tax, read on. This and other second job enquiries are answered below.
Understanding Second Job Tax in the UK
Second jobs in the UK, like others, are liable to income tax and National Insurance (NI). How much tax you will pay on a second job will depend on how much you are already earning from the first, alongside other sources.
Second job tax UK simply follows the usual UK taxation system. This means your second job income is combined with the first to arrive at your total taxable income. You are then taxed at a rate upon the tax bracket your income belongs to.
National Insurance contributions work differently, though, as you pay NI per job. If both of your jobs pay more than £242 per week, you will have to pay NI separately for both. See relevant article about salary increases
How Much Tax Do You Pay on a Second Job UK?
The second income is simply added on top of the first. HMRC considers the higher-earning job as the primary source where the personal tax allowance of £12,570 mostly applies, leaving no allowance for the second job.
This is why the second income usually falls into the basic tax rate bracket of 20%. If the second job pays well, you may be pushed to a higher tax bracket and, thus, a higher rate. Simply put, the tax liability depends on the following:
- how much of the total taxable income exceeds the personal allowance
- how much of the remaining taxable income falls in each tax band
Generally, personal allowance is used as above. However, if both your jobs are below the tax-free threshold, you may ask HMRC to split the allowance between them. This is the best approach if you have a fixed and stable pay but is not recommended for those with unpredictable incomes, as they may exceed the allowance at some point.
For the 2024/25 tax year, the UK tax rates are as follows:
- Basic rate tax – 20% on incomes between £12,571 and £50,270.
- Higher rate tax – 40% on incomes between £50,271 and £125,140.
- Additional rate tax – 45% on incomes over £125,141.
So how much tax do you pay on a 2nd job? Use our UK Tax Calculator to get an estimate.
Do You Tell HMRC About Your Second Job?
This depends on whether the second job is through employment or self-employment. Those who are employees in both jobs do not need to report their second job to HMRC. Being under the PAYE system, their employers are legally obliged to provide them with the P45 form, which includes their tax code. Tax deductions are automatically done under PAYE payroll.
If they are employed in the first job and self-employed in the other, they will need to register as self employed with HMRC, file self assessment tax return annually, and pay both income tax and National Insurance. No action is needed from those who are self-employed in both jobs.
Do You Know? HMRC has joined the new data sharing rules where digital platforms report about their user base and incomes. This made the tax authority more rigorous with the side hustle clampdown. Digital traders must see to it they registered as self-employed and file tax returns.
What Should the Tax Code Be for Your Second Job?
Tax codes ensure that you get the right tax deductions, which are automatically done on a PAYE payroll. The main job usually shows 1257L (for the 2024/25 tax year), assuming it pays beyond the personal tax allowance.
Second jobs, on the other hand, will reflect as either of the following:
- Basic Rate – BR
- Higher Rate – D0
- Additional Rate – D1
If the second job shows the same 1257L tax code, you must inform HMRC, as this can lead to a hefty tax bill later on.
Other Second Job FAQs
There is no need to provide a P45 form. The new employer will ask the employee to fill out the Starter Checklist (previously P46).
It is legal, given they are within their employer’s current contract limitations (if any). Usually, employers only prohibit their workers from partaking in other jobs with conflicting interests.
No, it is simply because the personal allowance is generally already applied in the first income, making the second job look like it is taxed more.
Generally, taxpayers stop paying Class 4 National Insurance when they reach the state pension age.
Pay slips mostly show the tax code. Taxpayers may also check their P60 forms.
Need Help with Your Second Job Tax Affairs?
How much tax do you pay on a second job? This depends. You will need to consult a tax advisor for accurate guidance. Usually, if you have a sporadic, varying income, the standard tax-saving strategies will not work in your case. Legend Financial is here to help with these kinds of situations and more.
We have helped a lot of employed and self-employed people sort out their tax affairs for over ten years, from calculating their tax bill to claiming tax refunds. Our offices are spread throughout the United Kingdom so you can have both in-person and online assistance, as you prefer. Talk to one of our tax return specialists today!
