confused by tax on 2 jobs

mattk1234

Hi All

been looking at my tax issues recently as I am thinking of letting my house out so would need to pay tax on these earnings.

I currently earn at basic rate and also have some other work that still keeps me just in the basic rate. The second job i also PAYE. So I i have paid tax on both of these jobs. I did some googling and it turns out i might need to fill a tax return and pay NI on this 2nd job. It is working for an exam board marking exam papers.

I want to get my tax affairs in order before i launch into the world of letting and all that entails.

I've never had any comms with HMRC so a bit worried about being stung as this could go back 2 tax years now.

If I ignore this and then filed say next april for this current tax year with my house letting stuff all in order am i likely to get them noseying into previous years and get big fines etc.

Cheers for any advise
M

jem16

mattk1234 wrote: »

I currently earn at basic rate and also have some other work that still keeps me just in the basic rate. The second job i also PAYE. So I i have paid tax on both of these jobs. I did some googling and it turns out i might need to fill a tax return and pay NI on this 2nd job. It is working for an exam board marking exam papers.

If both jobs are PAYE, you will be paying NI as appropriate.

Perhaps some figures and tax codes for both jobs would help give a better answer.

mattk1234

Thanks for the reply

My tax code is 810L

my main salary is about 34K which i pay tax and NI on.

my 2nd jobs... i just remembered i work for 2 exam boards probably earn me an extra 4-5K a year which I can't find a tax code on my statements but they have taken 20% tax.

The house I will be letting in the future should bring in gross 5K.

mattk1234

I think the exam marking could be treated as self employed but i've paid tax on alreadys so not sure what if anything i need to do

CLAPTON

if you have more than one PAYE job, the usual arrangement is that the first (largest income ) has your tax allowance i.e. 810L for 2012-13 and the others have BR i.e. 20% tax

this works OK assuming that your first job pays more than your tax allowance (which it obviously does) and your total income is less that the 40% tax band 42,475 (after deduction of any payment to pensions)

mattk1234

So Clapton does that mean I dont have to file a return then?

And presumably when i come to let my house I'm going to have to be careful to not cross 40%

CLAPTON

mattk1234 wrote: »

So Clapton does that mean I dont have to file a return then?

And presumably when i come to let my house I'm going to have to be careful to not cross 40%

If they are being taxed at PAYE then you are paying the correct tax.

If you have rental income you will have to file a return.

I see absolutely no reason to reduce your profit by trying to stay under 40% tax band; why would you do that?

mattk1234

Good point.. I've never got close to 40% before - i think its my thinking about could i be bothered to do XYZ extra work if I'm being taxed 40% on it. But i guess renting a house isn't quite the same. Many thanks for your reassurances.

CLAPTON

mattk1234 wrote: »

Good point.. I've never got close to 40% before - i think its my thinking about could i be bothered to do XYZ extra work if I'm being taxed 40% on it. But i guess renting a house isn't quite the same. Many thanks for your reassurances.

well if you are below the 40% tax threshold
you actually pay 20% tax plus 12% NI so 32% in total on each marginal pound

if you are above the 40% you pay
40% tax plus 2% NI so 42% on the amount over the threshold.. so more but not that much more

do bear in mind that you will be able to deduct a lot of expenses from rental income which will have the effect of reducing your tax.

nomunnofun

mattk1234 wrote: »

Good point.. I've never got close to 40% before - i think its my thinking about could i be bothered to do XYZ extra work if I'm being taxed 40% on it. But i guess renting a house isn't quite the same. Many thanks for your reassurances.

Bear in mind also that, if only earning £5K on the second job, there will be no NIC to pay on these earnings on the assumption that the job is not linked to the main job.