Second Job Tax Rates: How Taxing Two Salaries Works in the UK

Working multiple jobs is a popular way to increase earnings, pursue different interests, or transition into self-employment. However, holding two jobs complicates your UK tax position. If you receive two salaries, you must ensure your tax-free Personal Allowance is allocated correctly. Otherwise, you risk underpaying tax and facing a large tax bill from HMRC. In this guide, we explain how two salaries are taxed and how to manage your tax codes.

How Taxing Two Salaries Works

HMRC grants every individual a single tax-free Personal Allowance of £12,570 for the tax year. Typically, this allowance is allocated entirely to your primary job (the one that pays you the most) using the standard tax code 1257L. Your second job is then taxed from the very first pound you earn. To handle this, HMRC assigns a tax code to your second job that skips the tax-free allowance, such as:

• BR (Basic Rate): All earnings from this job are taxed at a flat rate of 20%. This is the most common code for secondary employment.
• D0 (Higher Rate): All earnings from this job are taxed at a flat rate of 40%. This is assigned if your primary job already pushes your total income into the higher rate band.
• D1 (Additional Rate): All earnings from this job are taxed at 45%. Used for very high earners.

Splitting Your Personal Allowance

If your primary job pays less than the tax-free threshold of £12,570, you should not leave the default codes in place. Doing so means a portion of your personal allowance goes unused in job one, while you pay 20% tax on job two. You can contact HMRC to **split your personal allowance** between the two jobs (for example, allocating £8,000 of allowance to job one, and £4,570 to job two). This prevents overpaying tax and maximizes your take-home pay throughout the year.

National Insurance with Two Jobs

Unlike Income Tax, which is calculated on your combined total earnings, National Insurance (NI) is calculated on each job **independently**. You only pay employee National Insurance on earnings above the Primary Threshold (£242 per week or £1,047 per month) in each individual job. This means if you have two jobs earning £200 per week each, you will pay 0% National Insurance, even though your combined income is £400 per week. However, if you are a high earner, HMRC will run a year-end check to ensure your contributions do not exceed the maximum NI cap.

To check how your combined income from two jobs will be taxed and calculate your net monthly take-home, use our Two Salary Calculator.

Frequently Asked Questions (FAQ)

Q: Will working two jobs push me into a higher tax bracket?
A: Yes, tax brackets are based on your combined annual earnings. If Job 1 pays £40,000 and Job 2 pays £15,000, your total income is £55,000. Because this exceeds the £50,270 higher rate threshold, the £4,730 portion above the threshold will be subject to 40% income tax, even if neither job pays above £50,270 individually.

Q: What should I do if I think I’ve overpaid tax?
A: You do not need to worry. After the tax year ends (April 5th), HMRC reconciles your earnings. If you have overpaid tax, they will send you a P800 tax calculation letter (usually between June and November) and issue a refund directly to your bank account or send a cheque.

Q: How do I tell HMRC about my second job?
A: When you start a second job, your new employer will ask you to fill out a Starter Checklist. You must select “Box B” (this is my only job now) or “Box C” (I have another job or receive a state pension). Selecting Box C tells payroll to apply the BR code immediately to prevent underpaying tax.

Q: Do I need to do a Self Assessment return if I have two jobs?
A: In most cases, no. If both jobs are under PAYE, your tax is deducted automatically. You only need to register for Self Assessment if your combined income exceeds £150,000, you have untaxed self-employed earnings, or you owe high income child benefit charges.