Second Job tax - how does tax work with two jobs in the UK?

Whether you’re saving for something special, thinking about changing your career, combatting the increased cost of living or fancy some variety in your working life, there are lots of reasons why you might get a second job.

Whatever it is, having one gives you something to think about on the tax front, especially if you move into a higher tax bracket. So, how does second job tax work? Let’s take a closer look.

Your second job and tax

The UK has a total workforce of about 30 million people, and well over a million of them have more than one source of regular income. That number is increasing too but not everyone affected by it is entirely happy about it. Whether they’re having to find extra cash because money’s too tight on their main job or they simply want to expand into other areas of work, more and more UK workers are taking on extra jobs.

There are a few important things to know about second jobs:

• You get the same rights when you take on extra work as you have in your main job. That means you should be entitled to a contract. This is an important point, because whenever you’re working for someone else, you get some basic protections.

• Your employment contract should spell out exactly what your job title is, how many hours you’re expected to put into it and – crucially—what you’ll be paid for doing it. On top of that, it’ll explain the scope of your responsibilities and any perks or benefits you’ll qualify for.

One of the basic protections we mentioned above is that you can’t be made to put over 48 hours a week into any one job. If you’re over the age of 18, you can decide for yourself to put in more time than this – but it still can’t be a necessity of the job.

Second jobs you may not realise are second jobs

Let's deal with the obvious one first: it's possible to have two jobs without even realising it. A second job is can be classed as anything you make money from in addition to your primary role. This can be anything from:

• renting out a property

• making and or selling online 

• delivery driving such as UberEats or Deliveroo

If you're making over £1,000 a year, HMRC's going to want to hear about the money coming in. Depending on your set-up and situation, you might well owe some extra tax on that cash.

This will generally mean signing up for the Self Assessment system and filing yearly tax returns to report your income and expenses. You'll have strict deadlines to hit, whether or not you end up owing any tax - and there are some pretty nasty penalties in store if you mess things up and don't file or pay in time.

One thing that particularly muddles things up for people new to Self Assessment is that (unlike PAYE) you're paying the tax you owe for self-employment after you've earned it – at least mostly. When you file your yearly tax return, you get a bill for what you owe and a deadline to pay up (the 31st of January). However, HMRC will use the figures in your tax return to estimate the tax you'll owe the next year as well, and make you pay two “payments on account” against it. They basically divide your expected upcoming tax bill in half and make you pay a chunk of it by the 31st of July, then the rest by the following 31st of January. It's actually supposed to make things easier for you, believe it or not, since paying ahead of time in instalments is a little less of a shock to your wallet than coughing up potentially many thousands of pounds at once. Even so, it's one of those tricky little areas of the tax rules that can cause serious headaches if you don't keep your wits about you.

Do you need to tell HMRC about your second job?

In the UK, having two jobs is completely legal, as long as your contract with your first job doesn’t forbid it. So before you take on a second job, look closely at your current contract to make sure it’s okay with respect to things like conflicts of interest.

If your first and second jobs are both under an employer, all of your tax should be calculated and paid through payroll. In this instance, you shouldn’t have to tell HMRC about your second job as your new employer should handle this for you.

However, if your second income comes in the form of self-employment, you must handle the tax yourself. You can do this by registering for Self Assessment. This allows you to notify HMRC about your second job by filling in an annual Self Assessment tax return.

Impact of having two jobs on your tax code

Your tax code determines how much tax-free income you can earn before you have to pay Income Tax. For the 2024/25 tax year, the standard tax code for most people with a single job is 1257L, giving you a £12,570 tax-free Personal Allowance. 

This tax-free amount isn’t affected by the number of jobs you have. When you get a second job, it’s usually best to apply your Personal Allowance to the job that pays the most. 

However, if neither of your jobs has an income above £12,570, you can split your Personal Allowance. In this instance, you will then be assigned:

• A primary job tax code

This is usually for the job that pays the most and will typically be the standard 1257L tax code.

• A secondary job tax code

This is usually for the job that pays the least and will typically be a BR, D0 or D1 tax code.

If you’ve used up your personal allowance in your first job you may see a 0t tax tax code.

How much tax do you pay on a second job?

When you get a second job, your secondary tax code will determine how much tax you have to pay.

• BR (Basic rate): If you earn between £12,571 and £50,270, you’ll be taxed at 20%
• D0 (Higher rate): If you earn between £50,271 and £125,140, you’ll be taxed at 40%
• D1 (Additional rate): If you earn over £125,140, you’ll be taxed at 45%

Here are some examples of how much tax you may pay in a range of scenarios.

Example 1: Combined salary below personal allowance

If your main job pays £15,000 and your second job pays £10,000, your main job uses up your Personal Allowance. You then pay the basic rate of 20% on the remaining £12,430 of your total income, made up of £2,430 from your first job and all of your second job.

Example 3: Combined salary pushing into higher tax bracket

If your main job pays £45,000 and your second job pays £15,000, your main job uses the full Personal Allowance and the rest is taxed at 20%. As your total income – £57,000 – exceeds £50,270, this means £6,730 of your second job's income will be taxed at the higher rate of 40%.

Underpaying or overpaying tax

The most common issue with having multiple income streams is the potential for incorrect tax payments.

• Underpaying is where you don’t pay enough tax and face a bill at the end of the financial year
• Overpaying means you pay too much tax and might be eligible for a refund

By regularly checking your tax codes and keeping HMRC in the loop about your earnings, you can avoid both of these things and pay the correct amount.

Other factors to consider

National Insurance contributions

You must pay National Insurance contributions on both of your jobs if you earn above the Primary Threshold (PT) of £242 per week. However, if your income is between the Lower Earnings Limit (LEL) of £123 and the PT, you don’t have to pay but still get the benefits of paying.

Pensions

Having a second job may give you access to another workplace pension. It’s important to track and manage these pensions effectively. You can transfer pensions to a favoured provider whenever you like.

Student loan repayments

If you have a student loan, repayments will be deducted based on your combined income from both jobs. Make sure you monitor these deductions to avoid overpayments or underpayments.

Get in touch with us for help

Thinking of taking on a second stream of income? Maybe you’ve already taken the plunge. Either way, if you have any questions or are unsure about tax with multiple jobs, don’t hesitate to get in touch with us. Our team of specialists are always on hand to help.

Second job tax - FAQs

Do you pay more tax on a second job?

Your tax rate depends on your total income. However, income from a second job can be taxed at a higher rate if it pushes your total income into a higher tax bracket.

Do you pay National Insurance on a second job?

If your total earnings from both your first and second jobs exceed the National Insurance contributions threshold, you will pay NICs on both incomes.

Will having a second job affect my benefits?

Having a second job can affect benefits like Universal Credit and tax credits. Your Universal Credit may decrease by 63p for every £1 earned from your second job, and changes in income must be reported to the Tax Credit Office if you receive Working Tax Credit.