It is not very uncommon among people to handle two jobs simultaneously. To keep up with today’s advanced lifestyle, it has become important for a person to earn a decent amount for him to spend a comfortable life. You must understand the functioning of tax and how much you are liable to pay when you have two jobs.
Let’s begin with addressing how you are taxed when you have multiple jobs
An individual who handles two jobs is added to the employer’s PAYE (Pay as you earn) system. It is important that you pay keen attention to this step. At this stage, while filing the new starter checklist, you provide all the necessary documents to your employer that you already have an additional job. It is after then they are able to assign you the most suitable tax code. The code ensures you pay the accurate amount as tax, neither too much nor too little.
You will need to sort both the employers into categories: Primary and Secondary. It helps the employer to figure out the appropriate amount for personal allowance. When you hide the fact that you already have one job, the employer unintentionally applies the standard tax code. It indicates HMRC that you must get your full personal allowance. This way you end up receiving the amount twice and lead you to underpay the tax.
How much tax do you need to pay with two jobs in hand?
- Suppose your primary job pays you 15,000 pounds per year and by your second job you are able to make 5000 pounds per year. The amount of the entire personal allowance will be based on the primary job that pays you more. Therefore, all your remaining income from your second job comes under the tax radar. The basic rate of interest is 20% because the total earning here is under 50,000 pounds.
- As you work for two jobs, suppose your primary one pays your 9000 while the other one offers 3000 pounds. In this situation salary from both, jobs will be combined to determine the amount of personal allowance. None of your earning should be under the tax radar.
- If both the jobs pay your equal, supposedly 9000 per year. The personal allowance will be evaluated from both the jobs combined. You can ask HMRC to split this across both your jobs. Here you have to decide which one is more stable than the other. Income from the stable one will be 100% tax-free as it will cover your personal allowance. Tax will be subjected to your second job.
- In case your annual income is and over 50,000, then here is how it goes. Suppose your first job pays your45000pounds per year. The second job is giving you 10,000 every year. Your personal allowance will be charged on your first income. You will be charged a basic rate of interest on the remaining 32,430.