Wondering about the second job tax and how it might affect your income? It is important for you to manage the tax payments in a way that does not make you pay too much if you are doing a second job. There should be a balance for tax payments as paying too little or too extra will have negative impacts on your pocket.
We have got some points covered in today’s article by keeping the advice into serious consideration. The first important factor to learn is about being crystal clear if it is allowed to opt for a second job.
Let’s keep first things first. Say that if the second job is a good viable option, you must go for it.
After this ensure that the current job contract does not have any clause that can stop you from taking a second job. There could be a conflict in the contract that says something about the prevention of a second job. Talking to the employer would be a great idea if this is the case.
However, if the contract says otherwise, you are good to move ahead and opt for the second job.
- The Basics
- Second Job Tax – How Much Do I Pay?
- Learn to Avoid Under and Overpaying Tax
- Final Thoughts
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Before you decide to practically start the second job, consider a few basics. In the following, we have listed a few of them:
- There will be impacts on taking both roles of the jobs, consider them with a clear head before you start.
- The terms and conditions about work in the contract are clearly understood by you.
- Each job can pay you minimum wage or more than that, not less.
Moreover, have you thought of the tax system as yet? How do they view your both jobs? It is to inform you that one of the jobs is considered your main income by the tax system. The amount of personal allowance of £12,570 is also given on the main job. This allowance is given to you before the tax payment.
You will not receive any personal allowance for your second job.
Second Job Tax – How Much Do I Pay?
The amount of tax payments is directly linked with your income on both jobs. This means that the tax you pay will depend on the salary you are getting from each job.
Sometimes, the position at first job comes down and even goes below than personal allowance. In such a case, the tax for a second job will be set at a standard rate of 20%.
For instance, if an individual receives an amount of £150 from his first job and an amount of £1oo from his second job every week, there will not be any tax on the first job because it is under the personal allowance. However, the standard 20% will be taxed for the second job.
Normally, the second job tax is paid by using the BR tax code. BR is the abbreviation of the basic rate that is 20% as mentioned above. Moreover, if the extra income put you in the higher tax bracket, you might have to pay more tax.
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Learn to Avoid Under and Overpaying Tax
It is important to get a starter from the new employer when you start a new job. As HMRC will require your other job details and this will be sent to HMRC for the purpose.
One should know the tax codes. The second job tax code is normally after the BR code number. Now consider the following to avoid paying too little or too extra amount of tax.
- You get a second personal allowance as you have not informed HMRC about your second job, you are paying too little in this situation.
- Because of the second job, you are now under a higher tax bracket but you choose to pay the basic tax. You are paying too little in this case as well.
- If the salaries you withdraw from both jobs are less than your personal allowance, you are paying too much tax.
Now that you have developed an understanding of second job tax, you know clearly when to inform HMRC. As well as how to avoid paying too much tax or too little tax. You are the best judge to make the right decision according to your situation.
We hope these few minutes of reading will help you to make the right choice and save you from paying an extra amount of the tax.
Disclaimer: The information about the Second Job Tax provided in this article including the text, images and graphics is general in nature and does not intend to disregard any professional advice.