How Will My Second Job Be Taxed?

If you have two jobs, does the second job get taxed more at all, even if the salary of both jobs combined is less than 36k?

(Mr Matt Yaylor, 29 September 2008)

Many people seem to think that second jobs are taxed at a higher rate. We have previously received questions regarding the tax treatment of a part time job if the worker is drawing a private pension, and much the same principle applies in your case; there is no separate rate of tax for a second job, although this is likely to affect your non-taxable personal allowances, and your tax code.

In the first instance, it is important to note that you have one non-taxable personal allowance per year, regardless of the number of jobs you have. Currently (for the 2007-08 tax year) this is set at £5,225, and this will increase in the 2008-09 tax year to a figure of £6,035. This non-taxable allowance will apply to just one of your jobs. As such, you will probably receive your allowance on your first job, meaning that the first £5,225 earned from this source will be free from tax. However, once you have used that allowance, all other income will be taxed at the normal rate.

You have mentioned that your combined salary is less than £36,000. For the 2007-08 tax year the earnings threshold for the basic tax bracket is £34,600, rising to £34,800 in 2008-09. As such, if your total income is less than this then it will all attract income tax at a rate of 22% for this tax year, and 20% for the 2008-09 tax year. You should also remember that you will almost certainly be liable for National Insurance Contributions, which will be paid at a rate of 11% for earnings above £110 per week. For example, if you earn £150 per week you would pay 11% of £40 (150-110).

Finally, you are likely to find that your tax code changes if you take on a second job. If you will continue to be a basic rate tax payer, your code will change to BR for ‘basic rate’, and will continue to be followed by a number that outlines the way in which your income is taxed. For more information on understanding your tax code, you may wish to read the relevant article elsewhere on this site.

How Will My Second Job Be Taxed?

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