With finances and paying our tax being harder than normal the past few years, some of us have had to take on second jobs to help pay the bills. About 1.18 million of us in the UK have a second Job and it is always increasing.
So what happens to our taxes when we get a second job? How much tax do you pay? Do you have to let HMRC know?
Here are the answers to some of the most asked questions when it comes to having second job and your tax.
How do I register my second job for tax?
When you start work for another employer you will usually give them your P45 with all of your information on, however, if you do not have a P45, you will complete a starter checklist. This allows the employer to get your correct tax code when adding you onto the payroll.
Both of these notify the HMRC when your new employer registers you for tax on their payroll.
How much tax do you pay on a second job?
When it comes to tax HMRC will only consider one of your jobs as your main job/income. For 2021/2022 you do not pay tax on any earnings up to £12,570 – this is known as your personal allowance.
The amount of tax you are charged is overall based on what you earn, for example, if you earn anything from 12K to 50K a year you are taxed at 20% of your income. Therefore, it is always advised to have your personal allowance applied to your highest paying job.
Second jobs are normally, if not always, charged at the basic rate of tax (20%). However, if you have a high income second job, your tax could be higher, more into the 40-50% range.
What about National Insurance?
In 2021/2022 it was set that if you earn over £184 a week you will have to pay National Insurance (Class 1). This is 12% if you earn £797 to £4189 a month, and 2% if you earn more than £4,189 a month.
What if I am Self Employed?
Now days, many of us have started a second job in the way of setting up our own small business. If you have set up a small business, you will need to register a self-assessment with HMRC. This allows the HMRC to collect tax from those who are self-employed. You will need to complete one of these self-assessments every year, so that your tax can be calculated.
Here at Makinson&Co, we understand all the little and big details that come with finances! We have a brilliant specialist team who work tirelessly to manage, advise and help our customers with their finances. You can find out more about what we do on our financial services page, or you can always contact us directly.