Second job tax: How to pay tax on a second job

Costs for virtually everything in the UK continue to rise, leading to many workers seeking a second job to help make ends meet. If you’re in this position, you’re hardly alone – there are around 1.2 million people in the UK with a second job. 

Whatever your reasons, having a second job means having to re-assess your tax situation. What you need to do depends on how you’re earning your side income: 

1. If your second job is with an employer, tax is calculated and paid through payroll as standard – but the actual amount will change so keep reading this guide to learn more. 
2. If your side income is through self-employment, you’ll need to register for Self Assessment and complete a tax return in addition to tax paid through your standard employee wages.

In both scenarios, the total amount of tax you have to pay will probably change when you get a second job. To help you make the best decision, read this guide to find out about the rules, restrictions and obligations governing second job taxes in the UK.

Is it legal to have two jobs in the UK?

Yes, it’s usually legal to have two jobs in the UK – provided you’re not restricted by your existing contract. Check through your employment contract to determine if you’re allowed to take on additional work. 

Some companies include a clause in their contract of employment that specifically limits your ability to take on extra work, especially if there could be a conflict of interest or a perceived threat of competition. 

This could prevent you from:

• Working for your employer’s competitors, clients, or suppliers
• Moonlighting in a role that could bring your employer into disrepute
• Breaching the UK’s Working Time Regulations
• Freelancing on the side

If you’ve reviewed your contract and can’t find anything about taking on a second job, you’re usually good to go. 

However, it’s also worth looking for non-competition clauses that might restrict your ability to freelance. For example, if you were a marketing executive planning to offer marketing services on a freelance basis, your company might perceive this as competition – putting you in breach of your contract. If in doubt, it’s best to consult a specialist before making a decision. 

Finally, you need to consider working hours before you take on a second job. Legally your employer can’t ask you to work an average of more than 48 hours per week unless you voluntarily sign an opt-out agreement. This 48-hour limit applies across both jobs, unless you sign the opt-out agreement with each of them. 

Do you need to tell HMRC if you get a second job?

Depending on your circumstances, you may need to talk to HMRC about your second job – especially if you’re self-employed. 

To determine if you need to inform HMRC yourself, let’s look at all of the possible scenarios: 

• If you’re employed in both jobs
  You don’t need to talk to HMRC if you’re employed in both jobs. When you fill out your Starter form (previously known as a P46), your second employer will handle everything with HMRC and get you up and running for payroll. But depending on your second job tax code (more on that a little later) you may want to talk to them to make sure you’re paying the right amount of tax.
  
  
• 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 so you can pay tax and National Insurance on your second job. Companies don’t handle taxes for self-employed contractors and freelancers, so this is something you’ll need to sort out manually.

• 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. 

What’s the tax code for a second job?

UK workers are entitled to a personal allowance, currently set to £12,570 – which is an amount you can earn before paying tax. You can only receive one personal allowance and most of the time it will be set against your main income, as it makes sense to apply the relief to the job paying you the most money. 

Your personal allowance will usually be represented in your main job’s tax code. Your second job will instead get a default “basic rate” or BR code. Depending on your financial situation, you may also get a D0 or D1 code on your second job’s payslip. 

Here’s a quick breakdown of the second job tax rates:

• Basic rate (BR) – 20% tax on earnings between £12,571 and £50,270
• Higher rate (D0) – 40% tax on earnings between £50,271 and £125,140
• Additional rate (D1) – 45% tax on earnings over £125,140

Splitting your personal allowance

If you don’t earn more than the personal allowance in your primary job, you can apply to split your allowance across both jobs. You’ll need to contact HMRC to request this and you should only do it if your income is fixed and stable. 

If you’re in a zero-hours contract but take on lots of sporadic shift work, it might be a bad idea as you can quickly outearn the allowance and have to repay HMRC. 

When to talk to HMRC about your second job tax code (and why it’s important)

If you feel like the tax code for your second job is wrong, it’s important to talk to HMRC about it as soon as possible. This can help you avoid big bills or rebates at the end of the tax year. 

If you'd simply like to check that the tax figures you have are correct, why not enter them into one of our dedicated tax calculators?

All you have to do is tell them a little bit about your two jobs, like when you started and how much you earn in each position. Then they’ll work out the best tax codes for you.

Here are three situations where you should talk to HMRC about your second job tax code:

1. If the tax code for your second job is 1257L
   The most common tax code in the UK is 1257L. It simply means that you have a tax-free Personal Allowance of £12,570. But if this is showing up on your second job’s payslips by mistake, it could mean that you’re getting the full allowance for both jobs. And while that may sound great on paper, a hefty tax bill will quickly come your way as soon as HMRC works out what’s happened.
   
   
2. If you feel like you’re paying too much tax
   You may be paying too much tax if your second job tax code is BR, but your total income is less than £12,570. In this scenario, you shouldn’t be paying any tax on the income from your second job because your total income is below the tax-free Personal Allowance.
   
   
3. If you feel like you aren’t paying enough tax
   The only thing worse than paying too much tax is not paying enough. While you may feel like you’re getting off lucky, you’ll quickly change your mind when HMRC sends you a bill at the end of the tax year. So if your second job tax code is BR and you think it should be D0 or D1, contact HMRC to let them know.

How much tax do you pay on a second job?

The tax you pay on a second job varies depending on your financial situation and is mainly based on whether you’re earning over the personal allowance. To give you a better idea of how it works, let’s look at three common examples so you can get an idea of how much you’ll need to pay.

Example 1: if your first job is over the Personal Allowance

Sam is an IT technician. He works full time at a school, but has taken a second part-time job to help a remote startup with their IT security. 

Here’s a breakdown of his income:

• First job – £35,000
• Second job – £7,500

Sam’s first job is above the Personal Allowance of £12,570 and his combined income is below the higher rate tax threshold of £50,270. This means that the tax code for his first job would be 1257L, while the tax code for his second job would be BR.

Now, let’s see how much tax Sam will have to pay:

• First job – 20% on everything over £12,570
• Second job – 20% of the full amount

So Sam’s total tax bill for both jobs would be £5,986.

Example 2: if your combined salary is below the Personal Allowance

Lacy is a trainee beautician. She works part-time at a salon on her local high street and has also taken a second part-time job as a cleaner.

Here’s a breakdown of her income:

• First job – £8,500
• Second job – £2,500

Lacy’s combined salary is £11,000, which is below the Personal Allowance of £12,570. This means she doesn’t need to pay tax on either of her jobs. But she needs to get in touch with HMRC to ask to divide the allowance, otherwise she’d be given the BR tax code for her second job which means she’d end up paying 20%.

Example 3: if your second job pushes you into a higher tax threshold

Frankie is a social media manager. She works full-time at an advertising agency, but has also taken a part-time job with one of her favourite brands.

Here’s a breakdown of her income:

• First job – £50,000
• Second job – £8,000

Frankie’s first job is just below the higher rate tax threshold of £50,270. But her second job pushes her into this bracket. That means she’ll need to pay 20% tax on part of her second job and 40% tax on the rest. For this, she’ll need to speak to HMRC so they can assign the right tax code for her situation.

Now, let’s look at how much tax Frankie will have to pay:

• First job – 20% on everything over £12,570
• Second job – 20% on the first £270, 40% on the remaining £7,730.

So Frankie’s total tax bill for both jobs would be £10,632.

What about a second income from self-employment?

If your second job is self-employed, you’ll need to register for Self Assessment and fill out an annual tax return – unless you earn less than the £1000 trading allowance. When you complete a tax return, you’ll need to mark down any income from employment, which is added to your total income, before subtracting allowances to generate your total tax liability. 

Learn more about this process in our guide to freelancing on the side. 

Repaying student loans from a second job

Though student loan repayments aren’t a tax, they are functionally similar and to an employee, they appear to be deducted the same way as income tax. However, student loan repayments are based on an income threshold and this is applied to earnings from each individual job, not your total earnings.  

That means you’re unlikely to have to make repayments from your second job unless it generates enough income to exceed the repayment threshold. 

Let’s look at an example:

• John is on a plan 2 loan which has a monthly threshold of £2,274
• John earns £2,500 from Job A and £500 from Job B each month
• John’s student loan repayments are only calculated from Job A since Job B doesn’t exceed the threshold. 
• To calculate his repayments, John works out the difference between his Job A earnings and the threshold: £2500 - £2,274 = £226. 
• He then applies the 9% rate to the difference, so 9% of £226. This results in a total repayment of £20.86 made each month on Job A only. 

Getting a tax refund if you’ve overpaid tax

Despite an employer’s best efforts or your own attempts to contact HMRC, it’s still possible that you will get assigned the wrong tax code. Paying 20% tax through a BR code when you haven’t used up your personal allowance means you’ll have paid too much tax. 

Similarly, it’s possible to underpay tax if you don’t tell HMRC you have a second job and they accidentally issue a new personal allowance against your second income. 

Speak to your employer if you think you’re paying too much or too little tax, as it’ll only come back to bite you later if you ignore it. They can then investigate your tax code with HMRC to make sure you’re on the correct system.

If you’ve overpaid, you’ll need to ask HMRC for a refund at the end of the tax year or wait for them to carry out a tax year-end reconciliation. 

How to make sure you’re paying the correct tax on a second job

The best way to avoid problems with HMRC and pay the correct tax on your second job is to make sure you fill out a Starter form (once known as the P46) with your new employer. This details your other employment and helps ensure you’re issued the right tax code. 

Once you’ve done that, check your first payslip and see if the tax code matches your expectations. If you feel you’ve paid too much or too little tax, speak to your employer first and then potentially to HMRC. 

If you’re a sole trader, use a platform like CrunchONE to accurately track your income and calculate your tax obligations ahead of time. This helps keep you ahead of the game and ensures you don’t fall afoul of HMRC’s regulations. 

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Your questions about second job tax answered

Can my employer stop me from having a second job?

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. In most cases, these clauses only prevent you from working for clients, suppliers, or other companies that could cause a conflict of interests. But 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?

No, you don’t need a P45 for a second job. 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 (previously known as a P46).

Do you get taxed more if you have two jobs?

Yes and no. 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?

Yes, you 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. You don’t get another tax-free allowance for a second job. 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.

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.

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Please note that the advice given on this website and by our Advisors is guidance only and cannot be taken as an authoritative or current interpretation of the law. It can also not be seen as specific advice for individual cases. Please also note that there are differences in legislation in Northern Ireland.

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