Second job tax and pay

Many people take on a second job to make some extra money, or as a stepping stone to starting their own business. But they might be unaware of their rights around taking a second job, and how they’ll pay tax and National Insurance on it.

Can my employer stop me from having a second job?

One of the first questions you need to ask yourself is if your existing contract of employment lets you take on a second job.

You should have been given a copy of your contract when you started working for your employer. If you don’t have one, your employer or HR department should be able to provide you with one.

Your employer might rule out you taking on extra jobs in situations where:

  • there might be a conflict of interest, for example working for a rival company
  • your second job might bring your employer into disrepute.

If you’re not sure, check your contract. If there’s nothing about second jobs stated in it, your employer can’t prevent you from taking another job.

What are my rights when working a second job?

Rights and contracts

Depending on your employment status, you’re entitled to rights at work, regardless of whether it’s your first or second job.

Whatever your employment status is – if you’re employed by someone else, you should have an employment contract.

This should set out, among other things:

  • job title
  • responsibilities
  • pay
  • hours of work
  • the benefits you’re entitled to.

National Minimum Wage

Almost all workers in the UK are entitled to be paid at least the National Minimum Wage – or the National Living Wage if you’re 23 or over.

Working hours

By law, your employer can’t ask you to work more than an average of 48 hours a week in a single job.

However, if you’re over 18 you can choose to work more hours than this. And you might need to if you want to take on a second job.

Income Tax on second jobs

If you’re working, you’re entitled to earn a certain amount of money without paying Income Tax. This is called the Personal Allowance and is £12,570 for the 2021/22 tax year.

You only get one Personal Allowance – so it’s usually best to have it applied to the job paying you the most.

If you work two jobs and neither income is above £12,570, you can split your Personal Allowance.

Example 1: if you have two jobs

Jane works two jobs. Her main job pays £14,000 a year, and the second £6,000.

Her whole Personal Allowance is applied to her main job. If she lives in England, Wales or Northern Ireland, she pays Income Tax at the basic rate of 20% on the £1,430 of her pay that’s above the allowance for her main job - – and on all her income from her second job

Example 2: two jobs below the Personal Allowance

Richard has two jobs. His main job pays £10,000 a year and his second £9,000.

Both of these are below the Personal Allowance, so he can split his allowance between the two jobs.

He can contact HMRC and get them to transfer £2,570 of unused allowance from his main job to his second job. Or he can wait until the end of the tax year, and ask HMRC for a refund.

You should only ask for your Personal Allowance to be split if your income from each job is predictable and stable. If it’s not, and one job ends up paying you more than expected, you’ll have underpaid tax.

Example 3: if your combined earnings are over £50,000

Rebecca’s main job pays her £45,000 a year. But she also has a part-time job paying £12,000 a year. This means she has a total income of £57,000, with all her Personal Allowance being applied to her main job.

Unless Rebecca tells HMRC this, her second job will be taxed entirely at the basic rate, when some of it should be taxed at the higher rate.

If she doesn’t tell HMRC this, she’ll have to pay extra tax at the end of the tax year.

Tax codes for second jobs

It’s important to check your tax codes. This will help make sure you’re paying the right amount of tax and don’t get unexpected tax bills, penalty charges and interest.

Your main job, assuming it pays you more than the Personal Allowance, should be 1257L for the 2021/22 tax year.

Your second job should have a BR, D0 or D1 tax code, depending on whether or not it’s taxed at the basic, higher or additional rate.

You can find your tax code on your payslips.

You can tell HMRC about starting a second job using the new starter checklist from your new employer.

National Insurance on second job

If you earn above £184 a week in the 2021/22 tax year, you’ll have to pay Class 1 National Insurance contributions.

If you earn more than this in both of your jobs, you’ll pay National Insurance contributions on both jobs.

How will having a second job affect my benefits?

Taking a second job can affect your tax credits or other benefits. So you need to work out how much extra you’ll be earning.

If you’re claiming Universal Credit, and aren’t getting the work allowance, your payment will go down 63p for every £1 earned.

If you’re still claiming Working Tax Credit, you’ll need to tell the Tax Credit Office if your income changes by more than £2,500. But this might count as a change in circumstances and could mean you have to make a new claim for Universal Credit.

Second job and pensions

Taking a second job might give you the opportunity to pay into another workplace pension scheme. But remember to keep track of any small pensions you’ve paid into.

If you pay a small amount into a pension in your second job, it might be worth combining it with a larger pension when you leave.

If you’re already receiving your State Pension, or you have a private or occupational pension, and you work as well, it can have tax implications.

Again, it’s important to make sure you’re paying the correct amount of tax and have the right tax code.

Self-employed as a second job

If you’re working your second job as self-employed, you’ll need to:

  • register as self-employed with HMRC
  • file a Self Assessment tax return by 31 January each year
  • pay your own tax and National Insurance contributions.

As you’re self-employed, you won’t get a payslip. So you’ll have to be careful about your tax code on your other job.

Usually, the job paying you the most should be classed as your main job.

However, if your second job is self-employed you might not know exactly how much you’re earning. This makes it potentially difficult to make sure your full Personal Allowance is being taken.

If both jobs are paying you below the Personal Allowance, you’re still entitled to split your allowance between them.

If one of your jobs is self-employed, you’ll pay tax and National Insurance contributions a year in arrears.

For example, for the money you earned in the 2020/21 tax year, you’ll need to pay the outstanding tax and National Insurance contributions by 31 January 2022.

This means it’s important you think about how you’ll pay what could be a substantial bill. The good news is, you should have an idea about how much tax you’ll owe at the end of the previous tax year. This gives you nine months to prepare.

Was this information useful?
Thank you for your feedback.
We’re always trying to improve our website and services, and your feedback helps us understand how we’re doing.
Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

Continue to website
Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

Continue to website
Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

Continue to website
Talk to us live for…
Talk to us live for…
Talk to us live for pensions guidance using…
Talk to us live for money guidance using…
0800 011 3797* Hours
  • Mon – Fri:9.00am – 5.00pm
  • Sat, Sun and bank holidays:Closed

* Calls are free. We’re committed to providing you with a quality service, so calls may be recorded or monitored for training purposes and to help us develop our services.

Talk to us live for money guidance using the telephone
0800 138 7777* Hours
  • Mon – Fri:8.00am – 6.00pm
  • Sat, Sun and bank holidays:Closed

* Calls are free. We’re committed to providing you with a quality service, so calls may be recorded or monitored for training purposes and to help us develop our services.

Talk to us live for pensions guidance using web chat
Hours
  • Mon – Fri:9.00am – 6.00pm
  • Sat, Sun and bank holidays:Closed
Talk to us live for money guidance using web chat
Hours
  • Mon – Fri:8.00am – 6.00pm
  • Sat:8.00am – 3.00pm
  • Sun and bank holidays:Closed
Talk to us for pensions guidance using our web form

We aim to respond within 5 working days

Talk to us for money guidance using our web form

We aim to respond within 2 working days

Talk to us live for money guidance using WhatsApp
+44 77 0134 2744

Download app: WhatsApp

For help sorting out your debts, credit questions or pensions guidance. For everything else please contact us via Webchat or Telephone.