In the UK, many people take on a second job to supplement their income. If you’re one of them, you might be wondering how much tax you’ll have to pay and whether your additional earnings will push you into a higher tax bracket. In this blog, we’ll walk you through the key tax rules for second jobs, how they affect your income, and what you need to know to stay on top of your finances.
Understanding Second Job Tax in the UK
When you take on a second job, both of your jobs will be subject to income tax and National Insurance (NI) contributions. However, how much tax you pay depends on your total earnings from both jobs and how they fit into the UK’s tax system.
The UK tax system works by adding your second job income to your first job’s income, and your total earnings will determine the tax rate you pay. National Insurance contributions are handled separately for each job, which means you’ll pay NI for both jobs if each earns over £242 per week.
How Much Tax Do You Pay on a Second Job?
When you earn income from a second job, your total taxable income is calculated by combining your income from both jobs. The higher-earning job is treated as your primary source of income and will be the one to apply your personal tax allowance of £12,570, which reduces your taxable income.
For the second job, you typically won’t have any personal allowance remaining. As a result, most second job income falls into the basic tax rate band of 20%. If your second job pays well, you could be moved into a higher tax band, meaning you’d pay more tax. Essentially, the tax you pay on your second job depends on:
- How much of your total income exceeds the personal allowance
- How much of your remaining income falls within each tax bracket
For those with stable income, it’s possible to request that HMRC split the personal allowance between both jobs. However, this is not recommended for people with fluctuating income, as it could result in exceeding the allowance at some point.
For the 2024/25 tax year, the UK tax rates are as follows:
- Basic Rate: 20% for income between £12,571 and £50,270
- Higher Rate: 40% for income between £50,271 and £125,140
- Additional Rate: 45% for income over £125,140
To get a better estimate of how much tax you’ll pay on your second job, you can use the UK Tax Calculator for 2024/25.
Do You Need to Tell HMRC About Your Second Job?
Whether you need to inform HMRC about your second job depends on whether you’re employed in both jobs or self-employed in one. If both of your jobs are through employment, you don’t need to report your second job to HMRC. Employers under the Pay As You Earn (PAYE) system will automatically deduct the tax based on your tax code. The P45 form you receive from your primary job will show the correct tax code.
However, if you’re self-employed in your second job, you’ll need to register with HMRC as self-employed. This means you’ll have to file a Self-Assessment tax return each year and pay both income tax and National Insurance contributions. Self-employed individuals working in both jobs don’t need to take further action, but they should ensure they’re properly registered with HMRC.
It’s important to note that HMRC now uses data-sharing rules with digital platforms, so if you’re a digital trader or involved in the gig economy, make sure you’re registered as self-employed and filing tax returns. HMRC has been increasingly vigilant about side hustles, so it’s essential to stay compliant.
What Should Your Tax Code Be for Your Second Job?
Your tax code determines how much tax is deducted from your wages. For the 2024/25 tax year, if your main job is your primary source of income and your earnings are above the personal allowance, your tax code will typically be 1257L.
For your second job, the tax code is usually one of the following:
- Basic Rate (BR): Used for second jobs where no personal allowance is applied.
- Higher Rate (D0): Applied if the second job falls into the higher rate tax band.
- Additional Rate (D1): Applied for second jobs in the additional rate tax band.
If your second job shows the same 1257L tax code as your main job, it’s essential to inform HMRC to avoid paying the wrong amount of tax, which could result in a hefty tax bill later on.
Conclusion
Paying tax on a second job in the UK depends on the total amount of income you earn and how it’s distributed between your jobs. Your main job typically uses your personal tax allowance, while your second job’s income is taxed based on your overall income. Understanding your tax code and knowing when to inform HMRC can help you avoid unnecessary tax issues. If you’re ever unsure, it’s always a good idea to seek professional advice to ensure you’re managing your taxes correctly and taking advantage of any available allowances.
