Second Employment Tax: What You Need to Know About Second Job Tax
In this guide, we break down second employment tax in simple terms to help you understand your second job tax duties, follow HMRC rules, and avoid paying more than necessary. Whether you’re thinking about taking on extra work, have already started a side hustle, or simply want to know where you stand, this article covers what you need to know. From how tax codes apply to your second job, to how much tax and National Insurance you might pay, we’ll guide you through the key points. Understanding second job tax can help you plan your finances, avoid unexpected tax bills, and make sure you’re getting the most from your hard work.
Do I Need to Tell HMRC if I Get a Second Job?
No, you don’t need to inform HMRC directly when you get a second job. Your new employer will collect your information using a starter checklist, which helps them assign the correct tax code. HMRC will be updated automatically through the PAYE system once your employer submits this form.
That said, it’s still a good idea to contact HMRC if your tax code seems incorrect or if you’re unsure about how much tax you should be paying. Using the wrong tax code could lead you to pay more tax or underpay, which might result in a bill later on.
How Much Tax Will I Pay if I Have Two Jobs?
The amount of tax you pay depends on your total income from both jobs during the tax year (6 April to 5 April the following year).
If your main job already uses up your tax-free personal allowance (£12,570 for 2024/25), then your second job will be taxed from the first pound you earn. The tax rate will depend on your overall income, which might push you into a higher rate or additional rate tax band.
Example:
- Main job: £35,000 per year
- Second job: £15,000 per year
- Total earnings: £50,000
You will pay:
- 20% basic rate tax on most of your second job income
- If your combined income exceeds £50,270, you’ll start paying 40% higher rate second job tax on any amount above that.
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Do I Pay National Insurance If I Have Two Jobs?
Yes, you usually do. National Insurance contributions (NICs) are calculated separately for each job, but second job tax rules mean you could end up overpaying unless you check your payslips. If you earn over the weekly threshold (currently £242 per week) in each job, you’ll pay Class 1 National Insurance on both.
This sometimes means you might overpay. HMRC usually reviews this after the end of the tax year and may refund any extra national insurance on a second job you didn’t need to pay.
Do I Need to Tell My Employer If I Get a Second Job (UK)?
There’s no legal rule requiring you to tell your employer about a second job – unless your contract says otherwise. Many employers include clauses about outside work, especially if it could cause a conflict of interest or affect your performance.
It’s best to check your employment contract or speak to HR if unsure. Transparency is often the safest approach.
How Tax Codes Work with Two Jobs
Your tax code decides how much tax is taken from your wages. Normally, your main job gets the full 1257L tax code, which applies the personal allowance.
Your second job will often have a BR (basic rate) tax code, meaning all income is taxed at 20%. In some cases, it could be D0 (higher rate) or D1 (additional rate) depending on your combined income.
If you notice something strange on your payslip, or you’re paying too much, it’s a good idea to contact HMRC and get your tax code reviewed.
How to Avoid Overpaying Tax on a Second Job
Here are some tips to avoid paying too much:
- Make sure your starter checklist is filled in correctly by your new employer.
- Keep an eye on your total earnings and what tax code each job uses.
- Check your payslips and tax code regularly.
- Submit an assessment tax return if you’re self-employed or if HMRC asks for one.
- Use HMRC’s online tools or speak to them directly if something seems off.
Second Job and Self-Employment: What’s the Difference?
If your second job is freelance, part-time self-employment or gig work (like selling online), you need to register for Self Assessment. You must file an assessment tax return each year to report your earnings and pay tax on them.
If your side hustle earns less than £1,000 in a year, you might not need to declare it – thanks to the trading allowance. But if you go over that, you’ll need to report your total income to HMRC.
Can I Earn a Small Amount Without Paying Tax?
Yes. Your tax-free personal allowance allows you to earn up to £12,570 without paying any income tax. However, this is usually used up by your main job. If your second job income is just a small amount, and you haven’t used all of your allowance, you may not owe extra tax.
But if both jobs take you over the allowance, you’ll start paying tax on the second job’s income right away.
Summary
Taking on a second job can boost your income, but it comes with tax responsibilities. Here’s a quick recap:
- You don’t need to tell HMRC directly, but your employer should use a starter checklist.
- Your tax band depends on your combined income.
- You may pay more income tax and national insurance contributions with two jobs.
- Your second job is likely taxed at 20% unless you reach a higher rate or additional rate.
- Always check your tax code, and don’t hesitate to contact HMRC if anything looks wrong.
- If your second income is self-employed, don’t forget your assessment tax return.
By keeping records and understanding the system, you can manage your job tax properly – and avoid surprises from HMRC.
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