Second Job Tax
Things to consider when taking a second job
There has undeniably been a huge increase, across all professions, of people taking second jobs or finding an extra source of income by ‘moonlighting’ (often on a freelance or casual basis) in a role that may or may not be related to their main job… many people take on a second job to make some extra money or as a stepping stone to starting their own business.
Working Time Regulations
The law states you may only work a certain number of hours each week (an average of 48 hours per week), although you can choose to Opt Out of this working hours limit if you want to. Riada will ask you to sign an Opt Out agreement to work over 48 hours per week.
If the long hours you work have an effect on your ability to do any of your jobs (you arrive late, or tired and possibly more at risk of having an accident, leave early, aren’t working productively, have more sickness absence and so on), Riada and your main employer may speak to you regarding your performance.
Tax and benefit implications
It is important to note that every person will have different circumstances regarding their finances and earnings. Keeping that in mind...
Tax and National Insurance contributions will take your second job into consideration as part of your earnings, although there is no separate (or higher) tax rate for a second job. Riada will ask you to complete an HMRC Starter checklist that will declare that you have another job, but you don’t have to tell us how much you’re earning.
Your yearly tax-free personal allowance will usually only be used against your main job and tax will be deducted accordingly, although you can ask HMRC to split the allowance between jobs. You will get a tax code for each job and it’s usual to have a BR (basic rate) tax code for your second job.
It’s important to check that the right tax code is being used for each, so have a look at your payslips if you have multiple tax codes, or think you are paying too much tax, and contact HMRC to check you understand what’s going on and that you’re being taxed correctly. You may also find you may have to fill in an annual Self-Assessment tax return.
Those receiving Child Tax Credits or Working Tax Credits should also consider their situation carefully before taking on a second job. Tax credits are calculated on your estimated income at the start of the year and the extra income from a second job will reduce your future entitlement.
Also, you need to consider the tax earnings thresholds. If your total income goes over one of the thresholds you may pay more tax than you expect, leading to a surprise at Self Assessment time.
Please refer to https://www.moneyadviceservice.org.uk/en/articles/pay-and-tax-when-working-in-more-than-one-job for the most up to date information and detailed advice.
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