Concerned about the tax on second jobs and how it might impact your earnings? Managing your tax payments so that you don’t pay too much is important if you have a second job. Tax payments should be balanced since paying too little or too much will hurt your finances. This blog is detailed information about How Much is Tax on a Second Job?
Let’s start with the basics. Insist that you should take the second job if it’s a good choice. Next, check your present job contract to make sure there are no clauses that would prevent you from getting a second job. The deal might say something that makes it illegal to have a second job. This is the kind of situation where talking to the boss would be super helpful.
The Basics Tax on a Second Job
Before you start the second job, there are a few things you should think about. The following is a list of some of them:
- If you want to do both jobs, you need to think about the effects of each one before you start.
- The work terms and conditions in the contract are something you fully understand.
- You can make at least the minimum wage at every job, not less.
Also, have you thought about the tax scheme yet? What do they think of both of your jobs? This is to let you know that one of your jobs is taxed as your main source of income. A personal income of £12,570 is also given on top of the main job. You get this money before you pay your taxes. There will be no extra money for you because of your second job.
How Much is Tax on a Second Job
When you work two jobs, your income affects how much tax you have to pay. In other words, the amount of tax you pay will change based on how much you make at each job. At times, the place at the first job drops below the personal allowance. In this case, the usual tax rate for a second job will be 20%.
People who get £150 from their first job and £100 from their second job every week will not have to pay any tax on the £150 from the first job because it is less than their personal income. It will be charged at 20% for the second job, though.
The BR tax code is usually used to pay the second job tax. BR stands for the basic rate, which is 20% as we already said. You may also have to pay more tax if the extra money puts you at a higher tax rate.
How HMRC Works out Tax on a Second Job
Your personal allowance of £11,850 (the amount you can earn before having to pay any tax on what you make) is based on the assumption that you have one primary source of income, and this is the job that the tax system considers to be your primary source of income.
Because of this, there won’t be a personal allowance because your supplementary income will be put on top of everything else. Even while it seems as though you pay a higher rate of tax on this money, the reality is that if you added the earnings from this employment to the earnings from your previous work, you would pay the exact same amount of tax overall.
How to Avoid Under and Overpaying Tax
When you begin a new job, it is important to get a starter form from the employer. Because HMRC will need to know about your second job, and this will be sent to them for that reason.
People should know how to file their taxes. Of course, the second job tax code comes after the BR code number. Now think about these things to make sure you don’t pay too little or too much tax.
- Because you haven’t told HMRC about your second job, you get a second job income. This means you are paying too little.
- As a result of your second job, your tax rate has gone up, but you still choose to pay the basic tax. Again, you are paying too little.
- You are paying too much tax if the money you take home from both jobs is less than your personal income.
Tax Codes for Second Jobs
You should check your tax codes. This will help you make sure you pay the right amount of tax and don’t get tax bills, penalties, and interest that you didn’t expect. If your main job earns more than the Personal Allowance, it should be 1257L for the 2023–24 tax year.
Based on whether it’s charged at the basic, higher, or additional rate, your second job should have a BR, D0, or D1 tax code. Your pay stubs will have your tax code on them. Use the new starter checklist from your new workplace to let HMRC know that you have started a second job.
Quick Wrap-Up
Since you now have an awareness of How Much is Tax on a Second Job, you are aware of the appropriate time to contact HMRC. In addition, how to prevent paying an excessive amount of tax or an inadequate amount of tax. You are the best judge to make the appropriate choice in light of the circumstances you are facing.
