Tax when you have two jobs

Two jobs cost the same total Income Tax as one job paying the combined amount, provided the tax codes are right. There is only one Personal Allowance of £12,570, and HMRC normally gives all of it to your main job. The second job is taxed from the first pound, usually with a BR code at 20 per cent. National Insurance is worked out on each job separately, so you can pay less of it than someone earning the same in one job.

How the allowance is shared

HMRC treats the job that pays most as your main one and gives it a code such as 1257L. Every other job gets a code with no allowance:

Code on the second job	What it does	Usual reason
BR	Taxes all pay at 20%	Total income stays within the basic rate band
D0	Taxes all pay at 40%	Main job already pays more than £50,270
D1	Taxes all pay at 45%	Total income over £125,140
0T	No allowance, taxed through the bands	HMRC does not have enough details

In Scotland the codes start with S, so SBR, SD0, SD1 and so on, and use Scottish rates. In Wales they start with C. The BR tax code guide goes into BR in more detail.

BR on a second job looks harsh on the payslip, because a £400 month gives £80 of tax straight away. The yearly total still comes out right, since the main job has already used the allowance.

When HMRC splits the allowance

Sometimes the main job pays less than £12,570 a year. A part-time midday supervisor who also does a few care worker shifts might earn £9,000 in one job and £6,000 in the other. Giving all the allowance to the first job wastes £3,570 of it, while the second job pays 20 per cent on everything.

HMRC can split the allowance in that case. The main job might get a code covering £9,000 and the second job a code covering the remaining £3,570. You ask for this through your personal tax account or the HMRC app by updating the expected pay for each job, and HMRC sends new codes to both employers.

A split suits steady hours. If pay in one job goes up and down, as with bank or zero-hours work, the split may need adjusting during the year. Any overpaid or underpaid tax left at the end of the year is sorted out through a P800.

Swapping which job is the main one

HMRC picks the main job from the information employers send. A new job that pays more, or cut hours in one job, can leave the allowance sitting in the smaller job. The bigger job then pays too much tax, sometimes under a 0T or emergency code.

Compare both payslips. The one with 1257L, or a similar number followed by L, should be the job paying most, and if it is not, tell HMRC which job is main and roughly what each pays. Checking your tax code shows where to look.

National Insurance on two jobs

Each employer works out Class 1 National Insurance on what it pays you and ignores your other job. Employee NI is 8 per cent on weekly pay above £242 (£1,048 a month), up to £967 a week, and 2 per cent above that.

Take £20,000 a year in a main job and £8,000 in a second job, both paid evenly through the year:

• Main job: NI on £20,000 minus £12,570, so 8 per cent of £7,430, which is £594.40
• Second job: £8,000 is below the £12,570 threshold for that job, so no NI is due

The same £28,000 in a single job would mean NI on £15,430, which is £1,234.40. Income Tax on the two jobs is £1,486 plus £1,600, the same £3,086 that one job would pay.

A second job paying below the Lower Earnings Limit of £129 a week does not count towards your State Pension record, though the main job usually will. National Insurance explained has more.

Student loans and second jobs

Student loan repayments are also worked out job by job. A second job paying less than your plan’s threshold for the pay period has nothing taken, even if your total income is above the yearly threshold. HMRC looks at total income at year end only if you file Self Assessment. Student loan repayments has the thresholds.

NHS bank work and supply

Many NHS staff take bank shifts with the trust they work for. Bank work paid by the same employer through the same payroll is often added to your normal pay and taxed under your main code. A separate employment record, or payment through a different trust, makes it a second job, usually on BR. Tax on NHS bank shifts covers this in detail.

Supply teachers working through more than one agency run into the same issue. Each agency is a separate employer for PAYE, so only one should have your allowance. Two agencies both using 1257L means you underpay, and the shortfall usually comes back as a P800 bill or a lower code the next year. Updating HMRC as soon as your pattern of work changes avoids that.