Income tax situation for 3 jobs?

Claremac

Please can someone help as I’m finding the tax situation I’m in very confusing. I’ve been doing a part-time job (Job 1) for the past 10 years teaching a French club for little kids. It’s term-time only and once a week so it only pays £450 per year. I’ve always assumed I didn’t need to declare it for tax as it was my only income. I am not employed by the company.

I am now also doing a job with a friend (Job 2). This is for £125 per week (£500/£625 per month - holidays). I started part away through last tax year and didn’t need to let HMRC know as I was not going to hit the starting rate for either Income Tax or NICs. Now we have to use the new Basic Tools RTI to input the payroll and I need to put myself on it as all employees need to be on it. I have to run this for the first time on Tuesday.

I have also started invigilating exams for a local school (Job 3). This will obviously be limited to a few days’ work in May/June time and will not add up to more than a few hundred pounds a year. They have put me on their books via the Local Education Authority and I have received an Income Tax code of 944L.

I have several questions.
1. 1. When I input my details on the Basic Tools RTI for Job 2 am I a new employee or existing?
2. 2. Is there still such a thing as having to let HMRC know about me via a P46 or is this handled by the RTI program?
3. 3. What tax code do I use on Job 2? Presumably not the 944L as then I would be using it twice.
4. 4. Do I need to do anything about Job 1?
5. 5. Do all the jobs count towards calculations for NICs or is it on the main job only as that is more than £109 per week?

I am hoping that there is a way to spread the tax allowance across all the jobs as I will not get anywhere near the £9,440 allowance. Sorry it’s a bit long-winded but I’m trying to get all the facts down. I’d really appreciate some help with this. Thank you.

Elaine_Wilson

I can see why you're getting confused.

Let's start with job number 1. You say you are not employed. Does this mean that you are self-employed? Have you registered as such? If not, then although you strictly should do this, you could probably just tell HMRC about this income each year in a letter as the figure is so small.

Job number 2 is obviously your main job. Have you signed a form P46 for this job? If not then the employer should probably have been deducting tax already. If this is the case I would suggest you sign one now and confirm it is your main job. For your specific questions -

1. You are an existing employee.
2. & 3. If the P46 is signed the 944L could be used. As you appreciate this could in theory give you double the personal allowance but I'll deal with this below.
4. As I mentioned above you either need to be an employee or declare the casual earnings.
5. NICs are worked out for each job independently so no payments would be due.

This leaves the job 3 position to be sorted. I think you should write to (or call) the office shown on that notice of coding and explain the position. You could ask them to split your allowances and set, say, £6,500 of the allowance against job 2 with the balance against job 3. Ideally this balance should allow for a deduction to allow for the income from job 1.

This procedure will result in the right result but doesn't strictly follow all the rules. However, in view of the amounts involved I think HMRC will accept this.

Davide123

You need to declare job 1, by completing a tax return.
Regarding the tax codes, I would suggest you call HMRV and explain, they will then amend the codes.

Suewre

Job 1 - I think you probably should have been registered as self employed and filling in a tax return since you started.

Job 2 - You are an existing employee and you should have been on the payroll since you started. For an employee to not need to be on the payroll, they must complete a P46 and tick box A - which you couldn't as you had another job, and earn below the lower earnings limit (LEL) which was £107 per week in 12/13 tax year, and you earnt more than that. If not on the payroll and satisfying both criteria, a p38a would be submitted at the end of the tax year, so HMRC would be aware of the employee. 12/13 was the last tax year where the p38a was in use.

Job 3 - You should have declared that this is not your only income on your starter declaration (or P46 if they are still using that, or if it was before 5th April), and have been put on tax code BR, then you would need to contact HMRC and ask them to split your code between your jobs.

System

Since Job 1 pays only £450 per year I think HMRC would be happy to treat it as "other income" and include it in the tax code applied to your main employment. You will still have to confirm it to them each year but not as formally as completing a tax return.

Claremac

Thank you all for the very useful comments. Since I posted the question I have found a fantastic charity called Taxaid which helps the lower-paid with tax questions. As most of you have said, I should have been doing tax returns for Job 1.
For Job 2 I am an existing employee. Unfortunately I had completely misunderstood the NICs and hadn't realised that for any month I was above the LEL I should have been on the payroll. I had thought that it was an average over the year. I will need to re-do the end-of year P35 for 2010/11 and 2011/12 (which I completed last week!) adding myself as an employee. There may be penalties unfortunately but, as the NICs contributions are low any penalty would be a percentage the cost would hopefully not be too high.
For Job 3 they have suggested to let the dust settle on the RTI changeover and then ask HMRC to split the tax code between the 2 jobs.
I feel a lot happier about it now, just need to explain it all to my boss tomorrow!