Will I be paying 40% tax on two jobs?
Discussion
Currently I am working full time (37.5 hrs per week) and paying 40% on my wages. I am thinking about doing some freelance work for different company, probably 10-15 Hrs a week addition to my current job.
I like to know if I will be paying 40% tax on both jobs.
Also, is there any hours restriction like how many hours one can do in a week?Just wondering if it is allowed to work 48 or 50 hours a week?
I like to know if I will be paying 40% tax on both jobs.
Also, is there any hours restriction like how many hours one can do in a week?Just wondering if it is allowed to work 48 or 50 hours a week?
Yep, you will pay 40% tax on both.
You have already used up your tax allowance with the first job so any earnings from the second will be taxed at 40%.
You will however save National Insurance as the contributions are worked out for each job. So on the second job you can earn up to the lower earnings limit before paying any NI.
If your combined income goes over 100K you start losing your personal allowance and over 120K you would pay 45% tax!
You have already used up your tax allowance with the first job so any earnings from the second will be taxed at 40%.
You will however save National Insurance as the contributions are worked out for each job. So on the second job you can earn up to the lower earnings limit before paying any NI.
If your combined income goes over 100K you start losing your personal allowance and over 120K you would pay 45% tax!
You pay Higher Rate Tax (40%) if your TOTAL income from all sources (employment, self employment, bank interest, dividends, rental income etc) when the total income for the year exceeds the Higher Rate Tax threshold in any given tax year.
The level at which an individual pays 40% tax in the current tax year (2013/14) is £41,450. So, if you are already on a Gross Salary from an employment which is greater than £41,450, then any additional income will be taxed at 40%.
If this additional stream of income is going to be treated as sole-trading/self employment income, it will be taxed under the Self Assessment system. If you don't already complete an annual self assessment tax return, you will need to contact HMRC within three months of the commencement of the self employed activity. You will also need to let them know whether you will be required to register to pay Class 2 Self Employed National Insurance Contributions.
The level at which an individual pays 40% tax in the current tax year (2013/14) is £41,450. So, if you are already on a Gross Salary from an employment which is greater than £41,450, then any additional income will be taxed at 40%.
If this additional stream of income is going to be treated as sole-trading/self employment income, it will be taxed under the Self Assessment system. If you don't already complete an annual self assessment tax return, you will need to contact HMRC within three months of the commencement of the self employed activity. You will also need to let them know whether you will be required to register to pay Class 2 Self Employed National Insurance Contributions.
I recently started a second job and the tax office worked out I was already working and sent the second employer a new tax coding notice.
This has a D0 code which means tax at 40% is taken at source.
Both employers have their own tax code to work with so the original employer just does the payroll as normal.
This has a D0 code which means tax at 40% is taken at source.
Both employers have their own tax code to work with so the original employer just does the payroll as normal.
SteveDyson said:
Do i have to inform the HR/Account department (of my current employer) about my new job as they normally sort out wages and payslip stuff.
No - not from an Income Tax point of view - although there may be an aspect to your employment contract that may have something to say about engaging in work for others outside of your employment)You intimated in the original post that this second line of income will be "freelance" which suggests a "self employment/sole trader" arrangement.
If that is the case, the comments I made above about registering for Self Assessment are valid.
If the second job is as an additional "employment", then your second employers will apply whatever tax code HMRC allocate to your second job. D0 is a typical Tax Code if you are already a higher rate taxpayer through your main employment.
Part of my contract (current employer)
Outside Interests; Other Employment
You must not, while employed by the Employer, directly or indirectly assist competitor, whether as an employee or as a consultant or otherwise, and whether or not gratuitously or within or beyond your normal working hours. Approval must be given by at least one Director before outside interests are undertaken which may conflict with the proper performance of the Employee’s duties or the Employer’s interests.
Does it mean i can work out of my office hours as i won't be working for a competitor?
Outside Interests; Other Employment
You must not, while employed by the Employer, directly or indirectly assist competitor, whether as an employee or as a consultant or otherwise, and whether or not gratuitously or within or beyond your normal working hours. Approval must be given by at least one Director before outside interests are undertaken which may conflict with the proper performance of the Employee’s duties or the Employer’s interests.
Does it mean i can work out of my office hours as i won't be working for a competitor?
Edited by SteveDyson on Thursday 9th May 13:43
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