Working second job while on furlough - Will I actually make money due to tax?

bp5678

I work in travel and am on furlough. My salary is £26,800 per year. However right now I'm on furlough pay and I'm almost certainly going to stay on furlough until the very end.

I was going to find work as a Dominoes delivery driver. This is minimum wage pay of £8.72. I'd likely work about 35 hours a week.

I'm not sure if working a second job would actually benefit me due to getting taxed more? Could anyone help?

Malthusian

You will pay income tax of 20% on all earnings, and National Insurance of 12% on your Domino's wages above £183 per week. So you will benefit but not as much as with the first job. (Your marginal tax rate is the same, but you pay a lower overall tax rate with the first job as it uses your £12,500 tax free allowance for income.)

Only you can decide whether it's still worthwhile. You could always put the extra money into a pension and get tax relief.

This is more of a question for the Employment board, but have you checked that your contract with your first employer allows you to take a second job, and that your employer is happy with it?

george4064

Malthusian said:

You will pay income tax of 20% on all earnings, and National Insurance of 12% on your Domino's wages above £183 per week. So you will benefit but not as much as with the first job. (Your marginal tax rate is the same, but you pay a lower overall tax rate with the first job as it uses your £12,500 tax free allowance for income.)

Only you can decide whether it's still worthwhile. You could always put the extra money into a pension and get tax relief.

This is more of a question for the Employment board, but have you checked that your contract with your first employer allows you to take a second job, and that your employer is happy with it?

I may be wrong, but I believe that under the furlough rules set by the UK government if a person is currently on furlough they are allowed to take up another job without jeopardising their 'furloughed job'.

bowlhead99

If you get furlough pay on that sort of salary then you are already going to be earning more than your annual personal tax-free allowance and above the level at which you start paying national insurance.

If you earn another (say) £300pw from Domino  on top of the money you're already getting from the furloughed job, then you will be paying tax (20%) and national insurance (12%) on that extra £300pw at standard rates, and perhaps end up with not much more than £200pw of Dominos pay for yourself after those deductions, on top of the net furlough salary you're already getting.  So, if you are wondering 'would it benefit me...'... you would have to decide if you would prefer to do the work and get the £200, rather than just spending 35 more hours in bed.

If you lost your travel job so that Dominos became your only source of income, you would end up keeping a lot more of the Domino wages for yourself (maybe £270 ish out of £300) because a lot of the Dominos income would be within your personal allowance for income tax or below the threshold for paying national insurance.

Albermarle

bp5678 said:

I work in travel and am on furlough. My salary is £26,800 per year. However right now I'm on furlough pay and I'm almost certainly going to stay on furlough until the very end.

I was going to find work as a Dominoes delivery driver. This is minimum wage pay of £8.72. I'd likely work about 35 hours a week.

I'm not sure if working a second job would actually benefit me due to getting taxed more? Could anyone help?

Apart from tax it would seem wise to keep hold of a second job/source of income until it is clear what is happening with your travel related job.

csgohan4

you could always consider salary sacrifice of your second job into your pension/SIPP to reduce your tax liability as much as possible and could also stop the sacrifice if you need the cash now at the cost of tax

Malthusian

george4064 said:

Malthusian said:

You will pay income tax of 20% on all earnings, and National Insurance of 12% on your Domino's wages above £183 per week. So you will benefit but not as much as with the first job. (Your marginal tax rate is the same, but you pay a lower overall tax rate with the first job as it uses your £12,500 tax free allowance for income.)

Only you can decide whether it's still worthwhile. You could always put the extra money into a pension and get tax relief.

This is more of a question for the Employment board, but have you checked that your contract with your first employer allows you to take a second job, and that your employer is happy with it?

I may be wrong, but I believe that under the furlough rules set by the UK government if a person is currently on furlough they are allowed to take up another job without jeopardising their 'furloughed job'.

What the government says is OK and what your employer thinks is OK may be two different things. You can dismiss someone without giving any reason if they have worked for you for less than 2 years. If your employer sacks you for taking a second job while furloughed then you may have both the law and moral right on your side, but you're still sacked.

If the OP's contract has a "no moonlighting" clause then some employers might take exception to the act of breaking your contract without asking them, even if these are exceptional circumstances where the second job is obviously no skin off their nose.

Some quick Googling suggests an employee does have every right to take a second job if it doesn't conflict with their furloughed job, but that's a reason to stand one's ground if the first employer says "nein", not a reason to not ask the employer at all.

To be clear, I'm not trying to dissuade the OP from taking a second job, only pointing out that checking with the first employer first is a no-lose situation. If the employer is reasonable they will just say "go for it" and if they are unreasonable, better to find that out now rather than later.

george4064

Malthusian said:

george4064 said:

Malthusian said:

You will pay income tax of 20% on all earnings, and National Insurance of 12% on your Domino's wages above £183 per week. So you will benefit but not as much as with the first job. (Your marginal tax rate is the same, but you pay a lower overall tax rate with the first job as it uses your £12,500 tax free allowance for income.)

Only you can decide whether it's still worthwhile. You could always put the extra money into a pension and get tax relief.

This is more of a question for the Employment board, but have you checked that your contract with your first employer allows you to take a second job, and that your employer is happy with it?

I may be wrong, but I believe that under the furlough rules set by the UK government if a person is currently on furlough they are allowed to take up another job without jeopardising their 'furloughed job'.

What the government says is OK and what your employer thinks is OK may be two different things. You can dismiss someone without giving any reason if they have worked for you for less than 2 years. If your employer sacks you for taking a second job while furloughed then you may have both the law and moral right on your side, but you're still sacked.

If the OP's contract has a "no moonlighting" clause then some employers might take exception to the act of breaking your contract without asking them, even if these are exceptional circumstances where the second job is obviously no skin off their nose.

Some quick Googling suggests an employee does have every right to take a second job if it doesn't conflict with their furloughed job, but that's a reason to stand one's ground if the first employer says "nein", not a reason to not ask the employer at all.

To be clear, I'm not trying to dissuade the OP from taking a second job, only pointing out that checking with the first employer first is a no-lose situation. If the employer is reasonable they will just say "go for it" and if they are unreasonable, better to find that out now rather than later.

Very good points, I did overlook how their employer might feel if a furloughed employee took another job.

MaxiRobriguez

Maybe ask your employer if they would mind and if they say it's fine get someone from HR to provide it in writing that you're OK to seek alternative work whilst on furlough.

If you do proceed, the answer as to what you earn after tax will be simple - multiply whatever you get paid by 0.68.

Malthusian

MaxiRobriguez said:

If you do proceed, the answer as to what you earn after tax will be simple - multiply whatever you get paid by 0.68.

Bzzt, not as simple as you think. The NI primary threshold is per job, not per person, so the first £183 per week is free of NI.