How does tax and NI work for a second job?

RMLHV

Hi,

I’ve just been offered a new job. I work in the NHS and this is a band 7 post so a promotion from my current band 6 post.
I need and want to work full time but they only have 30 hours available to offer me.
I really want to accept the job but I’m worried as part of my reason for applying for it in the first place was to earn more money but with part time hours, I’ll be bringing home less.
I can work bank shifts in my current job and could arrange to do that on my day off each week to increase my hours worked to full time. I’ve never had 2 jobs before so was just wondering how this works with paying tax and NI on the bank hours I would work. Its a completely seperate trust so it would be considered a second job, not just additional hours or overtime. Would I pay a lot more tax and NI on the bank hours worked than if I just had the one job at full time hours or should it not really make a difference?

Thank you

jobbingmusician

My understanding is as follows. Happy to be proved wrong if anyone has better knowledge.

How tax works - when you start work you provide a p45 or p46. If it's your second job you provide a p46 which states that it's your second job. I think the default is then that HMRC assumes you have used all your personal allowance on your first job, so you will be taxed at 20% (or higher if applicable) on all your earnings in your 2nd job.

NI - I understand that his applies separately to each job, so if your second job earns less than the NI threshold, you won't pay any NI on your second job. Weird tho this is, this might even mean that you come out ahead, with more money in your pocket!

engineer_amy

jobbingmusician wrote: »

How tax works - when you start work you provide a p45 or p46. If it's your second job you provide a p46 which states that it's your second job. I think the default is then that HMRC assumes you have used all your personal allowance on your first job, so you will be taxed at 20% (or higher if applicable) on all your earnings in your 2nd job.

!

Correct - your tax code on your second job will be BR (Basic Rate) meaning you will be taxed at 20% on all hours. However, (I don't know pay rates for NHS bandings) if you are part time in job 1 and are not using all of your tax free allowance (£11850 for a standard taxcode in 2018-19) you can ask HMRC to split the codes to allow you to use any of the unused rate band on your second job.
Although P46s have been done away with, you & the employer will complete a new starter checklist, which performs the same function as a P46.


With the national insurance, both jobs are treated separately. you can earn up to £157 per week in each job before you pay national insurance, at 12%.
Say you earned £200 per week in job 1, and £100 per week in job 2. You would pay £5.16 in national insurance on job 1, and nothing on job 2 as you haven't reached the threshold, so (ignoring tax for the moment) you would be coming away with £294.84 total over the 2 jobs. If however you earned £300 in job 1 only, the national insurance would be £17.16, leaving you with £282.84 and worse off overall.


The tax would eventually balance out, as you only get 1 allowance and pay 20% on income above the allowance (assuming you are not a higher rate taxpayer), if too much is taken on job 2, you would get a rebate at the end of the year.

Serendipitious

engineer_amy wrote: »

Correct - your tax code on your second job will be BR (Basic Rate) meaning you will be taxed at 20% on all hours. However, (I don't know pay rates for NHS bandings) if you are part time in job 1 and are not using all of your tax free allowance (£11850 for a standard taxcode in 2018-19) you can ask HMRC to split the codes to allow you to use any of the unused rate band on your second job.

In my colleague's case (working two jobs since December) HMRC split the codes automatically ready for the new tax year and notified her via the new 2018/2019 coding notice.

Serendipitious

engineer_amy wrote: »

With the national insurance, both jobs are treated separately. you can earn up to £157 per week in each job before you pay national insurance, at 12.
Say you earned £200 per week in job 1, and £100 per week in job 2. You would pay £5.16 in national insurance on job 1, and nothing on job 2 as you haven't reached the threshold, so (ignoring tax for the moment) you would be coming away with £294.84 total over the 2 jobs. If however you earned £300 in job 1 only, the national insurance would be £17.16, leaving you with £282.84 and worse off overall.

Can I please ask some advice? In this scenario, would the person be paying enough NI contributions to meet requirements, or would that contribution year eventually show up on the records as needing an extra payment to complete it?

molerat

Serendipitious wrote: »

Can I please ask some advice? In this scenario, would the person be paying enough NI contributions to meet requirements, or would that contribution year eventually show up on the records as needing an extra payment to complete it?

You do not have to pay any contributions to get a tick in the box. As long as you earn over £116 in a week from one employment you will be credited with NI for that week even though no NI will be paid.

anamenottaken

Serendipitious wrote: »

In my colleague's case (working two jobs since December) HMRC split the codes automatically ready for the new tax year and notified her via the new 2018/2019 coding notice.

They split the code if it looks like neither job will pay enough to use up the entire tax-free allowance.

For the OP, 30 hours of a Band 7 job will mean they earn more than enough in that job to use up their allowance so there would be no need to split the code.

t0rt0ise

The tax office do like to split the code sometimes even when you earn enough in one job. I asked them not to do this and to leave the full code in my main job and do BR on my small pension. It was easy enough to get them to change it.

Serendipitious

anamenottaken wrote: »

They split the code if it looks like neither job will pay enough to use up the entire tax-free allowance.

For the OP, 30 hours of a Band 7 job will mean they earn more than enough in that job to use up their allowance so there would be no need to split the code.

She's paying tax on both jobs so far.

Serendipitious

molerat wrote: »

You do not have to pay any contributions to get a tick in the box. As long as you earn over £116 in a week from one employment you will be credited with NI for that week even though no NI will be paid.

Thank you.