2 jobs tax uk

WHERE WILL HMRC LEARN ABOUT YOUR SECOND JOB?

When you leave a job, your employer should provide you with a P45, which is a piece of paper that contains important information such as your date of birth, name, address, National Insurance number, tax code, tax paid on your pay so far in the tax year, and so on.

If you are not leaving your current job and are just beginning a new one, you must complete a Starter Checklist for PAYE and email or deliver it to your new employer so that they can determine your right tax code before adding you to their payroll. Alternatively, your new employer may give you a hardcopy Starter Checklist to complete for PAYE purposes.

Employers use a tax code to determine how much tax-free income you may make so that they can deduct the appropriate amount of Income Tax and National Insurance payments (NICs) from the remainder of your earnings.

You must be aware! As an employee, you are not required to notify HMRC about your second employment. When your second employer registers you for tax via their payroll, HMRC will be notified.

HOW MUCH TAX ARE YOU GOING TO PAY ON YOUR SECOND JOB?

HMRC will consider one employment to be your primary source of income, and you will get a personal allowance for it. The normal Personal Allowance for 2021/22 and 2022/23 is £12,570, and earnings up to this level are tax-free. If you claim Marriage Allowance or Blind Person's Allowance, your tax-free earnings will grow even more.

Earnings over the Personal Allowance are liable to Income Tax at the following rates:

Basic rate — 20% on wages ranging from £12,571 to £50,270.

Higher rate — 40% on wages ranging from £50,271 to £150,000.

On taxable income of more than £150,000, the additional rate is 45 percent.

You must be aware! These rates apply to the tax years 2021/22 and 2022/23.

A Personal Allowance is not available if your taxable income exceeds £125,140.

You must be aware! It is advisable to apply your Personal Allowance to the job that earns the highest money. If you make less than £12,570 from both jobs, ask HMRC to divide your Personal Allowance between them to reduce your tax bill.

Second-job earnings are often taxed using a BR (basic rate) tax code, which is 20%. However, if your second job pays well, your tax code may be D0 (higher rate) or D1 (extra rate), indicating that you are paying tax at a higher rate (40 percent or 45 percent ).

WHAT ABOUT NATIONAL INSURANCE SUPPORT?

If you earn more than £190 per week in the fiscal year 2022/23, you must pay Class 1 National Insurance payments (NICs). If you make more than this amount in either of your occupations, you will be required to pay NICs on both at:

Incomes between £190 to £967 per week (£823 to £4,189 per month) are taxed at 12%; earnings of more than £967 per week (£4,189 per month) are taxed at 2%.

Class 1 NICs are deducted from your salary and paid to HMRC on your behalf by your employer.

WHAT IF YOU CREATED A BUSINESS IN ORDER TO EARN MORE MONEY?

Rather of taking on another work, many individuals are now starting their own part-time company (sometimes known as a "side-hustle") to complement their primary or day occupations. If you start a self-employed firm (rather than a limited company), you must register with HMRC for Self Assessment unless your earnings are less than £1,000 per year.

HMRC utilizes Self Assessment to collect tax from self-employed persons. Each year, you must complete and submit a Self Assessment tax return (service providers will do it for you), outlining your earnings and expenses so that the Income Tax and National Insurance Contributions (NICs) that you owe may be computed. These must then be paid directly to HMRC.

You must be aware! Each tax year, you may claim up to £1,000 in tax-free allowances for property or trade income. If you make money from both sources, you will be entitled to a £1,000 allowance for each. If your yearly gross property income is less than £1,000, you do not need to notify HMRC or record this income on your tax return.