NI and tax when have two contracts with the same employer

MILLIEMOGS

I currently work full time for the Civil Service. I have been offered a promotion but the new role is only half time. After much debate it has been established that if I wish to remain on full time hours I will need to have a dual contract with the second role being treated as secondary employment.

I am confused how this will affect my tax and NI as I can't find anything that relates to my exact situation. Am I right in thinking that my NI should be aggregated and would this mean that I should essentially pay exactly the same as if I was earning the same salary across one role.

Also what about tax? Apparently the second role will be given the BR tax code. However neither role will earn enough to use my whole tax allowance. I know that if you work for two different employers you can split your tax code but can you do this if you one employer but two contracts, or am I going to have to claim it back each year?

I want to make sure that I am not going to end up worse off financially by having two separate contracts.

Dazed_and_C0nfused

Don't know about NI but if you have two jobs then you have two tax codes, the fact that they are both with the same employer is irrelevant.

If you will earn say £10,000 this tax year with your original job then you would have tax code 1000L there and 257T at the new job (allowing £2579 before you pay tax).

Basic rate tax will be deducted from your first payment but then HMRC will review your tax code (when they receive details of your first payment from the new job) and split it as appropriate.  If you don't think the split is correct then you can always ask for it to be changed.

MILLIEMOGS

Thanks, I was just going by the policy that states it is usual for secondary role to be taxed under emergency BR code. Perhaps they have forgotten how rubbish their pay isand not reaching my tax threshold on one part time role.

Dazed_and_C0nfused

Any second job is usually taxed at basic rate to start with.

If it isn't and the emergency tax code (1257L) is used then something has gone wrong.

But basic rate isn't correct for everyone, some might need tax code D0 (40% tax) or have spare tax allowances like you do HMRC will try to get teh code accurate for your circumstances.

Basically what happens on day 1 (basic rate) isn't set in stone for ever.

chrisbur

Regarding NI the rule is if you have two jobs that are not connected they are treated separately for NI and you get an allowance for each job so earnings under the earnings threshold currently £797 a month in both jobs have no NI deducted. Earnings which are connected as is the case here as same employer should have those earnings added together and just get the one allowance and as a result the NI adds up to the same as if the two jobs were one job.   But if the employer is not able to do this calculation for joining the two payments and treating then as one then they are allowed to go to the system for two separate jobs and give an NI allowance for each job.  
So in your case it depends on your employer if they have the facility to work out NI on your jobs as if they were one job then you will pay the same NI as if they were one job; but if they cannot do this you will pay less NI as you are getting two allowances.  I would imagine the Civil Service have am PAYE system that can unite the details of two employments into one figure for NI but if they cannot then there may be one problem with separate NI calculations. It does reduce the NI you pay but if it results in both jobs having a level of pay below the Lower Earnings Limit £520 a month you will be treated as not having paid any NI and to keep the year as a paid year for NI you would have to pay the NI yourself as class 3 which would probably work out as more than you saved having it split.  Earnings between the Lower Earnings Limit and the Earnings Threshold will have no NI deducted but you are treated as if you had paid it and that would avoid having to pay for Class 3 even if it applied to only one job.

MILLIEMOGS

Thanks Chrisbur for your detailed explanation.

That was my basic understanding regarding the NI but wanted to be sure I wasn"t missing anything before I formally accept the role.  As the promotion role involves commuting costs I am actually going to be worse off financially until the first incremental rise kicks in, so didn't want to find myself with a nasty shock come payday.

I wasn't aware of the Lower Earnings Limit, however both roles are above this anyway.

I too would have thought the Civil Service had the capacity to aggregate the NI but who knows?

Savvy_Sue

I would be shocked if the Civil Service payroll couldn't accommodate two separate jobs, but that doesn't mean it would be possible. 

On the payroll system I manage, we've had someone on two different rates of pay. Both monthly amounts show on their gross pay, but all the deductions are made on the gross total. 

But then, my payroll is less than 50, and I guess Civil Service is several orders of magnitude greater than that ... 

Chrisbur's explanation is spot on to me. You should be able to get the tax codes sorted if they have to split it. 

chrisbur

The guidance for this last time I checked was....
"add together the earnings from each job and work out NICs on the total unless it is not reasonably practicable to do so"
I have put the important bit in bold.  What is or is not reasonably practical is rather open to interpretation, and I doubt if HMRC do any checks on this. I suspect that if it involves any extra work or trouble in finding out how to add the two employments together for NI many payroll depts. will leave them separate.   Always assuming that they are even aware of this rule.

Savvy_Sue

It could come down to something as basic as whether the Civil Service runs more than one payroll, and if it does, whether these two contracts fall to different payrolls. 

I have remembered that we used to run two separate payrolls at one stage: there was a very discrete part of the company which had its own bank account, different T&C etc. I think in that situation we'd have struggled to add the NI payments together, even with our current payroll system (because each part of the company would be set up separately). 

Dazed_and_C0nfused

I suspect the "civil service" runs dozens of not hundreds of payrolls.

DWP, Home Office, MI5, HMRC, Foreign Office etc etc will likely all be different employers.

KSRL130612

I’m in a very similar situation.
i have two roles with the NHS 
0.6 WTE on Band 8b , 0.4 WTE on Band 8a 
to complicate things even more I have a salary sacrifice car which I had when I was fulltime Band 8a (£7176 reduction on annual salary ) 

my year end salary was £50,771 because I only started the split roles in July last year my end of year tax didn’t look right and was being told I owed £2500 tax. This was because they had  worked out I had the split role part way through the year.  This part has been sorted now 

I think I paid about £1400 too much tax across 23/24 if I aggregated my earnings and deductions- tax office don’t think so
mt predicted tax has gone up by around £1500 for the upcoming year because I have two tax codes , 8b ( main job ) 1282l and 8a is on BR code.

i can never get through to the tax office , payroll have been helpful but say that they only follow what the tax office tell them to deduct

ive had this in a previous employment and did end up paying £1600 too much tax and had a rebate. 

As there have been many variables over the year including , increase in pay for promotion , nhs back pay ( which I ended up owing more money on pension ) pension rate going up and then down and then back up again next month , plus salary sacrifice , it’s all very messy and confusing. I know the tax amount I paid for 23/24 will be reviewed and most likely sorted with rebate but I can’t get the tax office to understand I have two roles with different rates of pay with the same employer that equate to 1 fulltime role (37.5) so instead I am facing nearly an extra £150 per month tax deduction 

why can’t they just work out my deduction on total salary and make my monthly take home pay correct - I don’t want to end up waiting a full year to receive a refund.