Two Jobs Tax?

Phirefly

I've checked through old threads on this topic and can't find anything relevant to my situation, and a whole lot of conflicting advice. I was wondering if someone could give me the facts please.

I have a full-time permanent job paying £26k annual salary. As far as I know I'm paying the standard rate of tax and NI on this. I'm about to start freelancing in addition to my permanent employment and will be on the payroll of another company for this. I will be earning around £200 p/w.

What can I expect to happen re: my tax and NI contributions?

• Am I right in my understanding that I will be paying 40% on my earnings over £34600?
• Will my tax code on my main job change if I am on the payroll for another employer and my annual earnings stay below £34600?
• Will my tax code on my main job change if I am on the payroll for another employer and my annual earnings exceed £34600?
• Will my main job employers be aware of the additional income?

I would greatly appreciate any advice on these questions or any other relevant info, thanks


**EDIT**

I've just read the posts about adding PA to those tax band figures, which I had overlooked.

But theres a chance I'll be earning over and above the £39,825 threshold anyway so my above questions still apply but with this figure..... oops!

brazilianwax

Easiest solution is for your second employer to deduct tax at Basic Rate (BR/emergency tax) from all of your freelance income, while your tax code stays with your permanent employment.

At the end of the tax year you'll get 2 P60s outlining income and tax deducted for the year - send those to your tax office and they will calculate any under/overpayment on your combined income and refund/adjust your tax code to rectify it.

Phirefly

Thanks for your speedy reply!

*trying to get my head around* so I pay emergency tax all year on my freelance earnings then send my p60s to IR in April and I'll get a rebate? That seems fine by me.

Would they then adjust my tax code though?

Basically I would prefer if my main job are not aware of the freelancing....

CLAPTON

You pay 40% tax on earning above £39,825 being made up of 5225 tax free, 2230 taxed at 10% and 32370 taxed at 22%.

Usually the tax code of your main occupation will remain unchanged and your second occuption will be taxed at BR (i.e. a flat 22% with no allowances). If your total earning are below 39825 this will be correct.

If your total earning go over the 39825 you will owe the taxman money at the end of the year. Its difficult to say how the taxman will seek to recover the under payment in tax.
However, even if they do change the tax code of your main job this will only show as an adjustment for under payment which could be due to several reasons.

brazilianwax

Phirefly wrote: »

Thanks for your speedy reply!

*trying to get my head around* so I pay emergency tax all year on my freelance earnings then send my p60s to IR in April and I'll get a rebate? That seems fine by me.

No problem

Basically yes. If you earn less than the higher tax threshold, any difference due (either way) should be minimal.

If you've gone into the 40% tax bracket then you will be owing some money. If I get a chance I'll work out the rough figures shortly. Do you pay into a pension or use salary sacrifice schemes?

Phirefly wrote: »

Would they then adjust my tax code though?

Basically I would prefer if my main job are not aware of the freelancing....

Not necessarily - if you pay off any outstanding amount then your tax code will stay at the standard single person's code.

Most people get their codes changed so that they pay it off over the year interest free

If they owe you money back, you can request a cheque.

brazilianwax

CLAPTON wrote: »

You pay 40% tax on earning above £39,825 being made up of 5225 tax free, 2230 taxed at 10% and 32370 taxed at 22%.

Plus any pension contributions are tax free

Phirefly

Legends, thanks. I knew I could rely on MSE family for good advice!

Phirefly

Yes I pay into a company pension something like £40 pcm, I'll check when I get home.

brazilianwax

Which will push the tax brackets up by £480 a year (based on £40 a month).