How Do I Pay Tax If I Have Two Part-Time Jobs?
By
HuutiMoney
If you have two part-time jobs and are wondering how you would pay taxes on each of them, you will find detailed guidance in the following blog post. While we will mainly be discussing how income tax is applied to earnings from two separate jobs, we will also explore how tax codes are applied when you have two part-time jobs and what are the common mistakes to avoid and make sure that you pay the right amount of income tax.
How Do I Pay Tax If I Have Two Part-Time Jobs?
The rules for paying income tax remain the same if you have two part-time jobs. This means that:
- your Personal Allowance will be deducted from your income before a tax code and tax rate is applied (this is £12,570 for the 2022-2033 tax year)
- you will be assigned a tax code for each job (you may have two different tax codes)
- the rate of income tax will be applied at 20%, 40% or 45% and will be based on your total income
This means that you will still be paying your income tax under the PAYE system if you have two part-time jobs, you will still be able to benefit from a tax-free Personal Allowance, and you may have two different tax codes for each job.
However, there are still a couple of critical points to consider when you pay taxes for two part-time jobs. Some of these are discussed below:
- Your Personal Allowance will remain the same even if you have two part-time jobs. However, it is best to have this tax-free amount of £12,570 applied to the job that pays you more and have the remaining amount of income taxed.
- If your total earnings from both part-time jobs are below the Personal Allowance threshold or less than £12,570, you are not required to pay income tax at all.
- If both of your jobs are below the Personal Allowance amount but the sum of your incomes exceeds £12,570, you can have your Personal Allowance applied to the sum total of earnings from both jobs. This means that you would need to contact the HMRC and request that the unused portion of your Personal Allowance be transferred from your first job to the second one.
How Are Tax Codes Applied When You Have Two Part-Time Jobs?
When it comes to tax codes being applied in the case of two part-time jobs, the HMRC will consider your job with higher earnings as your first job and the one that pays you a lesser income as a second job. It is on this basis that your Personal Allowance and tax codes will be assigned.
In most cases, individuals with two part-time jobs are assigned the 1257L tax code on their first job. This is the most common tax code for the 2022-2023 tax year which indicates that the basic rate of 20% is applied to your income after the deduction of the Personal Allowance amount of £12,570.
Your second part-time job will usually be assigned the BR, D0 or D1 tax code; depending on whether a basic, higher or additional rate of income tax rate is going to be applied. This can either be 20%, 40% or 45% of your income and will be determined by the amount of earnings you draw from your second job.
How Do I Know I’m Paying The Right Amount Of Tax With Two Part-Time Jobs?
If you want to check whether you are paying the right amount of tax on both of your part-time jobs, you should first check the tax codes on each of your payslips and then the amount deducted from your income in both cases.
You should be paying income tax at the following rates:
- 20% tax on earnings between £12,571 and £50,270
- 40% tax on earnings between £50,271 and £150,000
- 45% tax on earnings over £150,000
You should also be careful of the following situations:
- You are assigned the 1257L tax code on both of your part-time jobs: If this is the case, it means that you’ve been assigned a Personal Allowance of £12,570 on each of your jobs when it should only be assigned once. While this may reduce your income tax payment during the tax term. However, once the tax returns are calculated at the end of the tax term and HMRC officials find out that you were assigned an incorrect tax code, you might have to pay a hefty amount in tax arrears.
- You are assigned the BR tax code but your total income is less than £12,570: if you are assigned the BR tax code on your second part-time job, but your total income is less than the Personal Allowance amount of £12,570, you could be paying more tax than you should.
- You are assigned an incorrect tax code on your second job: If you are assigned the BR tax code on your second part-time job but you know that it should be D0 or D1 as your income is higher than £50,000, you should get your tax code corrected to avoid paying a lump sum amount at the end of the tax term.
Conclusion:
The above discussion clearly explains how your income tax is calculated when you have two part-time jobs by assigning your Personal Allowance to your first job. However, if you are still unclear about how this works, it would be best to either speak to someone at the HMRC helpline or seek the services of a tax advisor such as TaxAid.
References:
Second job tax and pay | MoneyHelper