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

According to the Office of National Statistics (ONS), 1.2 million people in the UK have a second job. This ranges from parents juggling a couple of part-time jobs around family life to white-collar workers taking on two remote jobs at once. And with inflation at a 40-year high and the cost of living rising every day, this only looks set to continue.

If you’re thinking of starting a second job, you’ll need to think about second job tax. In most cases, this is fairly straightforward. You’ll either pay tax through your employer, or you’ll need to register for Self Assessment to fill out a tax return.

But before we get into the different scenarios and tax codes you need to look out for, let’s cover the legal bit.

Is it legal to have two jobs in the UK?

Yes, it’s usually legal to have two jobs in the UK. But you should check your contract with your employer before taking on additional work.

Many companies include a clause in their contract of employment about taking on extra work, especially if there could be a conflict of interest.

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

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

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

You may need to talk to HMRC about your second job. This will all depend on whether you’re employed or self-employed in each of your jobs.

Let’s look at each scenario one by one:

• 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. 

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What’s the tax code for a second job?

The second job tax code is usually set as BR by default, which stands for “basic rate”. But depending on your situation, you may also see D0 or D1 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 £150,000
• Additional rate (D1) – 45% tax on earnings over £150,000

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 amount of tax you pay on a second job varies depending on your financial situation. 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, but she’s 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 for that to happen, otherwise they’ll give her the BR tax code for her second job and she’ll 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.

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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.

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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