If you have a second job, then there are six things you will need to be aware of ahead of the self-assessment tax deadline on January 31.
The Office of National Statistics (ONS) estimates that around 1.2 million workers in the UK have a second job.
With the cost of living rising every day, it's likely more and more Brits will follow suit and look for additional work.
While the extra income will be a necessity for so many, it doesn't come without tax implications that you will need to be aware of.
Experts at the tax and accountancy software platform, Crunch, have compiled together answers to the most Frequently Asked Questions (FAQs) about tax when you have a second job.
Do you need to tell HMRC if you get a second job?
You may need to talk to HMRC about your second job, however, this will all depend on whether you’re employed or self-employed in each of your jobs.
- You don’t need to talk to HMRC if you’re employed in both jobs
- If you’re employed in your first job and self-employed in your second job you’ll need to register for Self Assessment on the HMRC website
- If you’re self-employed in both jobs, you don’t need to contact HMRC if you’re already registered for Self Assessment for your first job.
Can my employer stop me from having a second job?
The tax experts at Crunch warn that your employer may be able to stop you from getting a second job if there’s a clause in your contract about taking on additional work.
However, in most cases, these clauses may only prevent you from working for clients, suppliers, or other companies within the same sector.
This is because it could cause a "conflict of interest" which can take a variety of forms.
However, a common type of conflict of interest with a second job can be if you work for one company which provides you with specific information and you use that information at your second job which doesn't have this info, then that is a conflict of interest.
Crunch also added: "If your second job clearly impacts your performance in your main job, your employer may have grounds for dismissal.
Do you need a P45 for a second job?
Crunch highlighted that you do not need to have a P45 for a second job, however, you’ll need to tell your second employer that you already have another job and won’t be able to provide a P45.
Instead, they’ll ask you to fill out a Starter form which was previously known as a P46.
Do you get taxed more if you have two jobs?
The tax and accountancy software firm says this answer can be both yes and no.
The group said: "You don’t get taxed more for having two jobs. Instead, your tax bill is based on your total income for the tax year.
"So while you won’t be penalised for having a second job, you’ll naturally pay more tax because you’re earning more money overall."
Do you pay more tax on a second job?
Crunch says you will "usually" pay more tax on a second job.
This is because your tax-free Personal Allowance of £12,570 is applied to your first job and you don’t get another tax-free allowance for a second job.
The experts added: "So assuming you’ve used up your whole allowance on your first job, you’ll pay tax on all the earnings for your second job."
This is because you will need to pay 20% of the whole amount of the income on your second income.
Things are different however if your combined income is below the personal allowance threshold or if you second job pushes your overall income into the higher tax bracket.
Do you pay National Insurance on a second job?
You only need to pay National Insurance on your second job if your second employer pays you over £242 per week.
Unlike tax, National Insurance is calculated on a job-by-job basis.
So if you earn £1,000 per week on your first job and £200 per week on your second job, you’ll only pay National Insurance on the first job.