Tax on two jobs

exoticus

Hi, my question is , if i am working in two jobs, making around 15-20 hours each , is it better to split my personal allowances between the two? And also how are my allowances calculated if i am paid weekly. For example if my allowance is £11000, this makes it £212 per week. So if one week i got more than £212, but another month way less than £212 ( to compensate for the month i made more), will i be taken tax if i made more than £212 That week, or is it calculated monthly/annualy? Thank you.

molerat

You need to work out how much you will earn each year in each job and split the code accordingly. If you have all your tax allowance set against one job where you do not earn over the allowance you will pay too much tax and have to reclaim at the end of year.

Tax is calculated over the whole year and divided by the pay periods. In period 1 you have a tax free amount. That is deducted from that period pay and tax calculated. In period 2 you have the tax allowance for periods 1 & 2 which is deducted from the pay from periods 1 & 2, tax is then calculated on the whole amount. The tax you have already paid is deducted from that tax total which is then deducted or even added to your pay if it works out negative.

exoticus

As far as i understood:

Let's say my allowances are £11000. My pay periods are weekly, this makes it £212 per week for allowances (no taxes). Can you please make an example for this "In period 2 you have the tax allowance for periods 1 & 2 which is deducted from the pay from periods 1 & 2, tax is then calculated on the whole amount. The tax you have already paid is deducted from that tax total which is then deducted or even added to your pay if it works out negative." .

molerat

Week1 pay £250, tax allowance £212 = £38 taxable, £7.60 tax deducted
Week 2 pay £150. £250 + £150 = £400, tax allowance £212 + £212 = £424. No tax due as the 2 months pay are less than the tax allowance but £7.60 has already been paid so will be refunded in your pay packet.

This all assumes you start in Wk 1 at the beginning of April.

exoticus

I see, but why in week 2 pay we add the allowances from week 1, which we already used in week 1.

molerat

Tax is cumulative so you need to pay the correct tax for what you have earned at any point in the year. In my example at wk2 you have had a total tax free allowance for the year of £414 and a total pay for the year of £400 so no tax is due at that point. As you already paid some tax in wk1, as at that point tax was due, it will be refunded with wk2's pay.

exoticus

Oh i got it now, thanks. Is there any way i can follow my taxes starting from this week?

molerat

Of course you can but if you have 2 jobs you need to get the tax codes split and go from there. On a tax code of 1100L you get £211.73 per week tax free and if your pay day is between Oct 25 - Nov 1 it is week 30. You need to know your total pay and tax paid (from all PAYE jobs this year) up to last week. If your tax codes are split the allowance will possibly not add up to the same amount because of the way the allowance tables work. All the data you need is here https://www.gov.uk/government/publications/tables-a-pay-adjustment-tables

Nick_C

Molerat is offering excellent advice, but I would just add one caveat. You only need to split your allowance if neither job in isolation pays you enough to use your tax allowance.

For example, if you have two jobs, one is paying £18K and the other is paying £12K, you could have the personal allowance allocated to your main job and no tax allowance on your second job. You would pay the same amount of tax as splitting the allowance 50/50 between the two jobs.

HMRC's preference is to split you personal allowance between all your jobs in the ratio of your expected earning from each job. But if your hours/income are variable, this can result in you not earning more than the allocated allowance for that job and paying too much tax. It can also cause problems when HMRC mess things up.

My OH works for 3 or 4 employers each year. His hours are variable with each employer, but he earns more than £11K on his main job, so he has all his allowance allocated to that job. For his other jobs, he pays 20% tax on everything he earns.

A normal tax code is 1100L. This means you can earn £11,000 a year without paying tax (and this allowance is calculated pro rata cumulatively each pay period). If you split your personal allowance evenly between two jobs, then for each job your tax code will be 550T (the T meaning you total up the allowance for each job to get your personal allowance).

If you have one job paying £9K and another job paying £3K, You should split your personal allowance as 825T and 275T. If you did an even split of 550T on each job, you would end up paying too much and having to claim a refund at year end.

If you have all your personal allowance allocated to one job, then on your second job your tax code should either be 0T or BR (basic rate).

In your situation, it is really important to keep an eye on your tax codes in each job and make sure you getting your full allowance and paying the correct tax.

I would recommend signing up to HMRC's on-line personal tax account.
You either need a Government Gateway ID, or use one of the independant verification companies. I use the latter route and chose the Post Office. It takes about 10 minutes to set this up.

https://www.gov.uk/personal-tax-account

Nick_C

And as an addendum to the above, what happens when HMRC mess up.

My OH choses to keep 1100L on his main job and 0T or BR on all his other jobs. We moved home last year, and I thought employers passed this information onto HMRC so we didn't.

When he got his pay slip this month, OH found his tax code had been changed to 190T and he has paid an extra £1000 tax :-(

HMRC decided his main job was one of his other employers who he has not worked for for over a year, and arbitrarily reallocated his personal allowance. They presumably sent the notices to our old address. Luckily, we have emergency funds we can draw on, as it will take a month to get this sorted out.

exoticus

Thank you very much, it's all clear now.