Many people in the UK choose to take on a second job, either to supplement their income, pursue a passion, or make ends meet during challenging times. But while a second job may offer additional financial security, it also brings extra responsibilities, particularly when it comes to taxation. Understanding how tax works on second jobs can help you stay compliant, avoid unnecessary penalties, and maximise your take-home pay.
This article explores the fundamental rules around paying tax on a second job, how the Pay As You Earn (PAYE) system works in this context, the role of your tax code, and how to make sure you’re not overpaying or underpaying HMRC.
How Second Jobs Affect Your Tax Responsibilities
When you take on a second job, your overall income increases, which can push you into a higher tax bracket or require you to pay more tax on part of your earnings. It doesn’t mean you pay more tax on your entire income, but it does affect how much tax is deducted from your wages.
If you have more than one employer at the same time, each one will operate PAYE separately. HMRC assigns a tax code to each job, and this tax code determines how much tax-free personal allowance you receive in that employment. The main issue is that you only get one personal allowance per tax year, so it typically gets used up by your primary job.
Understanding the Personal Allowance
The personal allowance is the amount of income you can earn each tax year before you start paying income tax. For the 2025/26 tax year, the standard personal allowance remains £12,570. If you have two jobs and both employers apply the allowance incorrectly, you might underpay or overpay tax.
In most cases, HMRC allocates your full personal allowance to the job with the highest income. The second job usually receives a tax code of BR, D0 or D1, meaning tax is deducted from all income at the basic, higher, or additional rate without any allowance.
PAYE and Second Jobs
The PAYE system is designed to collect income tax and National Insurance Contributions (NICs) directly from your wages. If you work for two different employers, each one applies PAYE independently. However, this can result in different tax treatments depending on the tax code HMRC assigns to each job.
Your main job will often be assigned a tax code like 1257L, which gives you your full personal allowance. Your second job is then likely to receive a BR (basic rate) tax code. That means you’ll pay 20% income tax on every penny you earn from that second job, because no tax-free allowance is applied.
If your combined income from both jobs pushes you into the higher-rate threshold, some of your second job income may be taxed at 40%, and if you earn above £125,140, then 45% applies on any income above that level.
How HMRC Tracks Multiple Incomes
HMRC uses information from your employers and pension providers to keep track of your total income. Every employer submits real-time information (RTI) to HMRC whenever they pay you. If you take on a second job and both employers report to HMRC accurately, your total income becomes visible to them.
However, tax codes are not always immediately updated. You might work a second job for several months before HMRC sends an updated notice of coding to your employer. In the meantime, you might be underpaying or overpaying tax.
This is why it’s important to check your payslips regularly and ensure that your tax codes are appropriate. If you suspect an error, you should contact HMRC or check your personal tax account online.
Different Tax Codes and What They Mean for Your Second Job
When it comes to second jobs, several tax codes might appear, depending on your circumstances.
- BR means you are taxed at the basic rate of 20% on all earnings. This is common for second jobs.
- D0 means you’re taxed at the higher rate of 40% on all earnings from that job.
- D1 means all income is taxed at the additional rate of 45%.
- 0T is used when your personal allowance has already been fully used elsewhere, or when your employer doesn’t have enough details to assign the right code.
Understanding your tax code is crucial. A BR code might be appropriate if your first job already uses your full personal allowance. But if you notice BR being applied to your main job instead, it could mean you’re being overtaxed.
When You Might Pay Too Much Tax
It’s surprisingly common to overpay tax when you start a second job. This can happen for several reasons:
- HMRC hasn’t yet updated your tax codes.
- Your employer is using an emergency tax code.
- You’ve left a job and the new one is still using the old tax code.
- You have variable income that confuses the automated system.
If you think you’re paying too much, the good news is that you can claim a refund. HMRC reviews income records at the end of each tax year and issues automatic refunds when overpayments are identified. But if you want to act sooner, you can call HMRC or use your online personal tax account to request a review.
When You Might Underpay Tax
While overpayments are inconvenient, underpayments can lead to bigger issues. HMRC might not immediately detect that your second job is pushing your total income above a tax threshold. If the incorrect tax code is used or if your personal allowance is applied twice, you could build up a tax debt that becomes apparent later.
HMRC usually identifies such discrepancies through end-of-year reconciliations. If they find you owe tax, they might recover it by adjusting your future tax code or issuing a demand for payment. You may also face interest charges or penalties if underpayments are substantial and left unresolved.
Self Assessment and Second Jobs
In most cases, you won’t need to file a Self Assessment tax return just because you have a second job. However, there are exceptions. If you:
- Earn over £100,000 in total income
- Receive untaxed income such as freelance or rental income
- Need to claim expenses over £2,500
- Have complex tax affairs (such as foreign income or investment gains)
Then you may be required to complete a Self Assessment. This allows HMRC to calculate your tax liability more accurately and make sure all income is accounted for. Even if you’re not required to file a tax return, you can still choose to do so voluntarily if you want to reconcile your earnings and ensure you’ve paid the correct amount of tax.
Keeping an Eye on National Insurance Contributions
Second jobs not only affect your income tax but also your National Insurance Contributions (NICs). Each employer will deduct NICs based on the income they pay you, and they won’t be aware of your earnings elsewhere. This can result in you paying more NICs than necessary.
Class 1 NICs are calculated per employer, not per individual. If your total earnings across two jobs exceed the upper earnings limit, you may end up paying excess contributions. If you overpay, you can apply for a refund from HMRC. However, many people don’t realise this and leave the overpayment unclaimed. Reviewing your National Insurance records periodically helps ensure everything is in order.
What If Your Jobs Are Different Types?
If you’re employed in one job and self-employed in another, the tax situation becomes a little more complex. Your employed income is taxed through PAYE, while your self-employed income must be declared through a Self Assessment tax return.
In this case, you’ll need to keep accurate records of all self-employed income and expenses. You will pay income tax and Class 2 and Class 4 National Insurance on your self-employment profits.
It’s essential to budget for the tax on your self-employed income, especially if your employed role uses up your personal allowance. The self-employed portion may be taxed entirely at the basic, higher, or additional rate depending on your total income.
Impact on Student Loan Repayments
If you have a student loan and you take on a second job, you could end up repaying more than you expect. Student loan repayments are based on your total income, not just one job.
However, each employer only sees their share of your earnings and deducts repayments accordingly. This can result in you overpaying student loans, particularly if both jobs separately cross the repayment threshold.
HMRC and the Student Loans Company reconcile this annually, but it can take time for overpayments to be refunded. You can contact the Student Loans Company directly if you suspect an overpayment.
Dealing with Pension Contributions from Two Jobs
Auto-enrolment rules mean that if you earn above a certain threshold in a job, your employer must enroll you into a workplace pension. If you have two jobs and both pay over £10,000 annually, you could be enrolled into two separate pension schemes.
This isn’t necessarily a problem, but it’s important to be aware of how contributions are being made. You may want to consolidate your pensions or manage contributions to ensure you’re saving efficiently for retirement. If one job pays below the threshold, you can usually still opt into the pension scheme voluntarily.
Informing HMRC About a New Job
When you start a new job, especially a second job, it’s crucial that your new employer has the right information. Providing your P45 from your previous job or completing a new starter checklist helps them apply the right tax code.
Failing to submit the right documents can lead to emergency tax codes being used. This typically results in excessive deductions until HMRC is able to correct the situation. You can also inform HMRC directly using your Personal Tax Account online or by contacting them via phone. Doing so helps ensure your allowances and codes are allocated properly.
When a Second Job Means You Must File a Self Assessment
Not everyone with a second job needs to file a Self Assessment tax return. However, there are circumstances where it becomes necessary. If your second job classifies you as self-employed, or if you receive untaxed income such as freelance earnings, consultancy fees, or payments through gig economy platforms, you must report this income to HMRC. This is often done by registering for Self Assessment and completing an annual tax return.
Even if your second job is technically a second PAYE position—meaning the employer deducts tax and National Insurance contributions from your pay—it may still result in unexpected tax implications. These might include underpayment or overpayment due to errors in tax code allocation. It’s important to review whether the second job triggers a higher total income that pushes you into a different tax bracket or invalidates reliefs and allowances you previously claimed.
Income over £1,000 from sources outside your main job, even if irregular or casual, must be reported unless you qualify for the trading allowance. This exemption permits up to £1,000 of annual income from self-employment or miscellaneous work before HMRC requires reporting. But once your untaxed earnings surpass this limit, a tax return is required.
Additionally, if you earn income from rental properties, foreign assets, dividends, or savings, you may be required to report all income sources together via Self Assessment, even if the second job alone wouldn’t mandate filing.
PAYE and Second Jobs: What HMRC Sees
When you work two jobs under PAYE, each employer provides HMRC with details of your employment and pay. Your first employer usually applies your tax-free Personal Allowance, while your second employer applies a different tax code—typically a BR code, which taxes all earnings at the basic rate.
However, problems arise if your tax code isn’t adjusted properly. In some cases, HMRC might not automatically adjust your main employment tax code to reflect that you’re earning more in total, especially if the second employer isn’t informed or you change jobs frequently. This could result in underpayment of tax, which you’ll be expected to repay once identified—either through your tax code adjustment in a subsequent year or via a tax return.
Moreover, if you receive any benefits-in-kind from either employer—such as company cars, health insurance, or relocation allowances—these need to be reported as they count toward your total taxable income.
The Self-Employed Route and HMRC Obligations
A common route for individuals looking for flexible income options is self-employment. This might include running a weekend business, tutoring, dog walking, or doing freelance work online. Once you are self-employed, even part-time, HMRC expects you to register for Self Assessment within six months after the end of the tax year in which you started earning.
For instance, if you earned income from a self-employed source during the 2024/25 tax year, which ends on 5 April 2025, you must register by 5 October 2025. You would then need to file a tax return and pay any tax due by the deadline in the following January.
Many people mistakenly assume they don’t need to tell HMRC if their second job earns modest sums or is seasonal. But even small amounts of self-employed income can create tax liabilities, especially when combined with your main job’s PAYE income. Your total tax obligation depends on your combined income across all sources.
Understanding Tax Codes When You Have More Than One Job
Tax codes are crucial when you’re juggling multiple sources of employment. Each code dictates how much tax your employer deducts. Your Personal Allowance—currently £12,570—is normally applied to your main job. If your secondary employer isn’t allocated part of this allowance, they will use a basic rate code, meaning income from that job is taxed from the first pound.
HMRC issues tax codes based on what they know about your employment. But if you start a second job and your employer doesn’t provide all the required starter details to HMRC—or if you don’t complete a starter checklist accurately—you might be assigned an emergency tax code. This can lead to higher-than-necessary deductions, although any overpaid tax can be reclaimed after the end of the tax year or via Self Assessment.
To avoid mistakes, it’s worth contacting HMRC when you start a second job to make sure the right tax codes are applied. If necessary, HMRC can split your Personal Allowance across both employers, although this isn’t always the most tax-efficient strategy depending on how much each job pays.
Role of National Insurance Contributions in Multiple Jobs
National Insurance is calculated separately for each employment, which can result in overpayments if your combined income exceeds the Upper Earnings Limit. You pay Class 1 National Insurance contributions on your employed earnings, and if your second job is also under PAYE, both employers calculate NI without knowing what the other is paying you.
This can lead to total contributions above the legal maximum. HMRC doesn’t automatically correct this mid-year, but you can apply for a refund after the tax year ends. You’ll need to show evidence of your earnings from both jobs and request a reassessment of your NI liability.
If your second job is self-employed work, different rules apply. You’ll pay Class 2 or Class 4 National Insurance depending on your profits. Class 2 applies if your profits are above a certain threshold, and Class 4 applies on higher profits at percentage rates. Unlike PAYE jobs, these contributions are calculated and paid through your Self Assessment return.
Second Jobs and Higher Rate Tax Bands
Adding a second job can tip your total earnings into a higher income tax band. For example, if your main job earns £35,000 annually and you take a second job that pays £10,000 a year, your total income becomes £45,000. Since the basic rate band ends at £50,270, you’re still within it, but getting close to the higher rate threshold.
Now, suppose you have other income—perhaps dividends or rental profits—the combination might push your total taxable income above £50,270. Once this happens, you pay 40% income tax on the portion above the threshold.
This becomes even more relevant if your second job or freelance work is highly profitable. Earnings from online platforms or side hustles might be overlooked, but HMRC has become increasingly proactive in identifying undeclared income via third-party data, including digital marketplaces and payment platforms.
When to Register for Self Assessment
HMRC requires individuals to register for Self Assessment if they meet any of several criteria:
- They earned untaxed income (e.g., from freelancing, rental property, or tips).
- They had income over £1,000 from self-employment.
- They received income from abroad.
- They earned over £100,000 in total income.
In the context of second jobs, the most relevant trigger is usually self-employed or freelance income above £1,000. If your second job is regular and you expect it to continue, early registration allows you to prepare and budget for tax due in January and potentially July through Payments on Account.
You register through HMRC’s online services by creating a Government Gateway account, after which you receive your Unique Taxpayer Reference (UTR). You must keep records of income and expenses from your second job, as these form the basis of your tax return.
The Pitfalls of Ignoring a Second Income
Failing to inform HMRC about a second income stream can lead to fines, penalties, and interest charges. HMRC may investigate discrepancies using its sophisticated Connect system, which cross-references bank activity, online sales, and employer data. If they find income that hasn’t been declared, they may issue a discovery assessment and demand payment of tax owed along with penalties.
Penalties depend on the degree of non-compliance. If HMRC believes the error was careless, they might reduce penalties if you cooperate. But if they consider it deliberate, the consequences are more severe—especially if you ignored prior reminders or failed to respond to queries.
Even if the income seems trivial, such as £100 earned through weekend baking, if repeated regularly and undeclared, it may create long-term issues. The tax system operates on the principle of total earnings. It’s not the size of a second job that determines liability, but the combination of all sources.
Managing Your Taxes When Juggling Two Jobs
To stay compliant, it’s essential to understand how your overall income affects your tax position. Keep detailed records of all earnings, invoices, receipts, and business-related costs. If you’re self-employed in your second job, use a dedicated bank account and accounting software to track income and expenses.
Also, take time to understand the Self Assessment deadlines. These include registering by 5 October, filing online returns by 31 January, and paying tax by the same date. If you owe more than £1,000 in tax, you might need to make Payments on Account in January and July, which can catch first-time filers off guard.
Plan for these obligations early. Unlike your main job, where tax is deducted automatically, earnings from your second job—especially if self-employed—may come with no deductions. Set aside a percentage of your income throughout the year to cover tax and National Insurance contributions.
HMRC also offers tools and calculators to help estimate your liabilities. If you’ve taken a second job recently or expect to earn more, it’s worth using these resources to assess whether you’ll cross income thresholds that require reporting or higher tax rates.
Seeking Guidance Without Full-Time Accountancy
Not everyone needs an accountant to manage their second job tax affairs, especially if the income is small or the job is temporary. HMRC provides detailed guidance online for employees with multiple jobs, as well as for those who are newly self-employed. Their helplines can offer personalized advice on whether you need to register and how to calculate your tax.
Alternatively, digital tools and record-keeping apps can help track income and expenses automatically. Keeping well-organised records is half the battle, especially if you’re audited or questioned by HMRC in the future. The key is ensuring transparency and accuracy in how you report your second job.
Staying on the right side of HMRC begins with knowing your obligations and being proactive about them. We’ll explore common mistakes, how to correct previous tax oversights, and what to do if HMRC opens an enquiry into your second income.
Avoiding Mistakes and Ensuring Tax Compliance
Taking on a second job can help ease financial pressure, support career transitions, or boost your savings. But with the extra income comes additional tax responsibility, and it’s easy to overlook how this affects your obligations to HMRC. We focus on how to avoid common mistakes, remain compliant, and take control of your taxes if you’re juggling more than one income stream.
Recognising the Complexity of Tax Obligations
More Income, More Responsibility
Having more than one job increases the complexity of your tax situation. Each employer deducts Income Tax and National Insurance Contributions (NICs) based on your tax code, but HMRC ultimately determines how much tax you should have paid in total. If your tax codes are set incorrectly, or if HMRC hasn’t been informed of your multiple income streams, you could face underpayments, penalties, or unnecessary overpayments.
Each Source Must Be Declared
HMRC considers all income when assessing your tax liability. Whether your second job is part-time, freelance, temporary, or even irregular, it still needs to be declared. Failing to disclose it can lead to compliance checks, fines, and future difficulties with tax returns.
Common Tax Mistakes Made by Second Job Holders
Assuming Tax Codes Are Automatically Correct
Many individuals assume that their employer will take care of the correct tax deductions. However, this depends heavily on the tax code assigned to each job. If both jobs apply the same tax-free Personal Allowance, you may underpay tax. Conversely, if no allowance is applied to the second job, you may overpay. It’s crucial to check your tax code for each employment and notify HMRC of any errors.
Ignoring the Self Assessment Requirement
If your second job involves self-employment, freelancing, or irregular work, you’ll likely need to register for Self Assessment. A common mistake is assuming that PAYE (Pay As You Earn) from your main job covers everything. HMRC requires full disclosure of all income streams, including from platforms like Uber, Etsy, Upwork, or Deliveroo.
Forgetting About National Insurance Contributions
NICs don’t just apply to your primary employment. If your second job earns above a certain threshold, you may be liable for Class 1 NICs through PAYE, and possibly Class 2 or Class 4 NICs if you’re self-employed. Not understanding this can leave you owing NICs and facing penalties later on.
Misunderstanding Allowable Expenses
If your second job is self-employed or includes costs like tools, travel, or training, you may be eligible to claim allowable expenses. Many people miss out on this by either not claiming legitimate costs or misunderstanding what’s allowable. Keeping detailed records and receipts is key.
Practical Steps to Ensure Compliance
Step 1: Check and Update Your Tax Codes
You can check your current tax codes through your HMRC Personal Tax Account. If your second job does not use the correct code (typically starting with BR or D0), you may be taxed incorrectly. Update your employment information with HMRC so they can assign the correct tax codes across all jobs.
Step 2: Track All Sources of Income
Whether you’re salaried, paid per gig, or freelance on the side, keep track of every payment you receive. Use spreadsheets, apps, or dedicated software to log your income, invoices, and bank deposits. This record will be critical for filing an accurate tax return.
Step 3: Keep Expense Records for Deductions
For self-employed individuals or those claiming allowable expenses, retaining receipts, invoices, mileage logs, and utility bills is essential. HMRC may ask for proof of these claims. Organise your documents monthly to avoid an end-of-year rush.
Step 4: Register for Self Assessment Early
You must register for Self Assessment by 5 October after the end of the tax year in which you started earning untaxed income. Late registration can result in fines, even before you file. Once registered, you can submit your tax return online by 31 January.
Step 5: Budget for Tax Payments
Unlike PAYE income where tax is deducted automatically, self-employed earnings or second job income might come in gross. It’s your responsibility to save for the tax due. As a rule of thumb, setting aside 20% to 30% of your additional income can prevent future payment shocks.
Tools That Can Help You Stay Organised
HMRC’s Personal Tax Account
This online portal shows your tax codes, income history, and outstanding tax liabilities. You can also update your employment status, check NI records, and access messages from HMRC.
Spreadsheet Tracking
For those not using accounting software, a simple spreadsheet can be effective. Keep columns for date, description, source of income, amount received, and category of expense.
Mobile Apps and Online Platforms
There are several mobile apps designed to help freelancers and second job workers manage their finances. These allow for on-the-go receipt scanning, expense categorisation, and earnings summaries.
What to Do If You’ve Made a Mistake
Correcting Past Tax Returns
If you realise you’ve underreported income from a second job, you can amend your Self Assessment tax return within 12 months of the filing deadline. If it’s older than that, you’ll need to write to HMRC to disclose the error voluntarily. Doing this before HMRC launches an investigation often reduces penalties.
Disclosing Income Voluntarily
HMRC runs several disclosure facilities, such as the Digital Disclosure Service, which allow you to admit tax mistakes and settle liabilities. By being proactive, you usually receive lower penalties and avoid criminal prosecution.
Appealing Penalties and Charges
If you’ve received a penalty for late filing, incorrect tax codes, or undeclared income, you may be able to appeal if you have a reasonable excuse. This includes unexpected illness, postal delays, or loss of records due to unforeseen events. HMRC reviews these appeals on a case-by-case basis.
Understanding HMRC’s Viewpoint
Increased Focus on Gig Economy Workers
In recent years, HMRC has increased scrutiny on gig economy income. Whether you’re driving passengers, delivering food, or selling crafts online, these earnings count as taxable income. HMRC uses data matching tools to cross-reference your earnings with platform-provided data.
Use of Real-Time Information (RTI)
Employers submit data to HMRC every time you’re paid. This real-time data helps HMRC identify who has multiple jobs and whether the total tax paid aligns with income. Discrepancies often trigger compliance letters or formal investigations.
Random Checks and Risk Profiling
Sometimes HMRC selects tax returns for random checking. In other cases, your profile may raise red flags — for example, inconsistent income reporting, repeated underpayments, or mismatched earnings across jobs. If contacted, always respond promptly and provide supporting evidence.
Financial Planning When You Have a Second Job
Plan for Student Loan Deductions
If you’re repaying a student loan, your second job could accelerate repayment. PAYE employers should deduct repayments once your income exceeds the threshold. However, if one job is below the threshold and the other isn’t, deductions might not occur automatically. You’ll need to ensure your total income is correctly reported.
Understand Tax on Benefits and Allowances
Additional income might impact your entitlement to benefits like Universal Credit or Working Tax Credit. These benefits are means-tested, so HMRC or the Department for Work and Pensions must be informed of any income changes.
Save for Unexpected Tax Bills
Having a second job can mean a larger tax bill at the end of the year, particularly if HMRC adjusts your tax code late or if you didn’t save throughout the year. Open a separate savings account dedicated to tax to avoid spending funds you’ll later owe.
Monitor Pension Contributions
More income means a chance to boost your pension contributions. If your second job pays via PAYE, your employer might also contribute. Check your pension statements to see if both jobs are helping to build your retirement pot.
Preparing for the End of the Tax Year
Conduct a Year-End Review
Before 5 April, review your total income, expenses, and tax already paid. This allows you to adjust your savings, make last-minute pension contributions, or update any incorrect HMRC records.
File Early to Avoid Stress
Filing your Self Assessment tax return early gives you time to gather information, make payments, and correct any mistakes. It also gives you a clearer picture of how much tax is owed — and whether you’ve overpaid.
Seek Advice If Unsure
Tax can be complex, especially when managing multiple income streams. If in doubt, speak to a professional or contact HMRC directly. It’s better to clarify uncertainties than make errors that cost time and money later.
Conclusion
Understanding how to report second job income through Self Assessment is essential for staying compliant with UK tax law and avoiding unnecessary stress or penalties. Whether your second job is a small side hustle or a substantial income stream, HMRC expects accurate and timely reporting of all taxable income.
We explored the legal definition of a second job, how HMRC distinguishes it from casual income, and why reporting it correctly is vital. Many people assume that small, irregular earnings don’t need to be declared, but this misunderstanding can lead to unintended tax issues. If you earn more than £1,000 from self-employment or any untaxed income sources, you’re likely required to register for Self Assessment and submit a tax return.
We dived deeper into the reporting process itself, highlighting the registration steps, tax-free allowances, and practical tips for filling out the Self Assessment form accurately. We also examined how second job income affects your personal allowance and overall tax bill, particularly when it pushes you into a higher tax bracket. Understanding allowable expenses and deductions can make a significant difference to your taxable income, so it’s worth taking time to learn what you can legally claim.
Finally, focused on avoiding common errors and pitfalls, such as late registration, under-reporting income, or misunderstanding what constitutes taxable income. We also addressed what happens if you fail to declare second job earnings, including HMRC’s penalties and interest charges. Knowing how to correct mistakes and engage with HMRC when issues arise can help you minimise damage and move forward with confidence.
By taking ownership of your second job income and proactively managing your tax affairs, you can turn what may seem like a bureaucratic headache into a routine part of your financial planning. The key lies in staying informed, keeping accurate records, and ensuring full transparency with HMRC. Doing so not only helps you avoid penalties but also gives you peace of mind, knowing you’re in full control of your tax responsibilities.