Second job tax in the UK – how much do I have to pay?

Calculation of income tax on a second job

Income tax is levied on profits or income for each tax year. This is based on combined income both your main job and your self-employment.

So it could mean that your profits as a sole proprietor push you into a higher tax bracket.

As an employee, your payslip will show the amount of income tax you pay and this will be automatically deducted from your salary. However, you will also need to itemize this on your self-assessment tax return so HMRC knows what you have already paid.

If your second job is also salaried, you will generally pay income tax at a basic rate on earnings above the £1,000 threshold.

As a freelancer pay taxes on a second income, you’ll have to settle it a little differently. This is because income tax is based on your profits and you can deduct things like allowable expenses.

HMRC has a second working tax calculator to help you work out what you will have to pay on your end.

How much tax do you pay?

The example below is based on the 2022-2023 tax year rates detailed on gov.uk. Note that there are slightly different rates if you live in Scotland.

Taxation year

2022-2023

employment income

£40,000

Benefits of self-employment

£14,000

Personal allowance (tax exempt)

£12,570

Taxable income

£41,430

Income tax payable at the rate of 20%

£8,286

Read our income tax guide to learn more about tax rates when you’re self-employed.

Taxation is complicated and this article is intended as a guide. If you are unsure, it is best to seek professional financial advice.

Do you pay national insurance for a second job?

As with income tax, your National Insurance (NIC) contributions will be automatically deducted from your salary via PAYE. This is called Class 1 National Insurance.

You will also have to pay national insurance on the income from your secondary activity. You’ll pay Class 2 NICs if your profits are £6,475 or more a year, and Class 4 NICs if your profits are £9,501 or more a year – our national insurance guide for Self-Employed provides more details on rates and thresholds.

The government website also has a tool for you to check your National Insurance record.

Additional tax deductions for companies

You can claim deductible business expenses for your side business just as you would as a sole proprietor with no other employment. This means you can deduct certain expenses – such as office supplies and travel – from your annual sales and only pay tax on your taxable profit.

HMRC Second Job Tax Codes

If your second job is self-employed, you will pay tax through self-assessment and will not need a tax code. However, you will have a tax code for your salaried employment. This is because tax codes are part of the PAYE system and are used by HMRC to tell your employer how much tax to deduct from your salary.

Read our guide to tax codes for more information.

Should I tell my employer?

You don’t have to tell your employer about this, but it may be a good idea to make sure that nothing in your employment contract prevents you from starting your own business, in the event of a conflict of interest, for example.

It’s worth remembering that if you choose to register as a limited liability company, your business will appear on Companies House and the information will be public anyway.

Still deciding your side hustle?

Popular side jobs can be anything from baking at home or making jewelry to running a courier business. To prepare, check out these guides:

Check out our list of top business trends for more inspiration.

Guides to help you start your business

Getting to grips with business administration, legal and financial responsibilities, and important licensing can seem overwhelming. These guides are created to help you understand each step of creating your side business:

Do you have a side hustle? Let us know in the comments.

Leave a Reply