Working two jobs and paying too much tax?

Are you on the right tax code?

If you have more than one job, it is important to make sure you are paying the right amount of tax. Problems can arise because the PAYE (Pay As You Earn) system does not easily cater for multiple jobs. PAYE means that your employer pays all the due tax on your behalf. If you are self-employed in any of your jobs, you will have to complete a self-assessment at the end of each year, to check how much tax you are due to pay.

You only have one tax free personal allowance per tax year and the number of jobs you have does not affect this. In 2022/23, the personal allowance is £12,570. The PAYE system is designed to treat one job as your main employment (against which your personal allowance will be given in full) and the other jobs as secondary (which are taxed at the basic rate of 20%).

This means that you should see a code number of 1257L (reflecting a tax free personal allowance of £12,570 for the tax year 2022/23 with the last digit removed and a letter added) against one job and a BR (basic rate) code against the others. BR code means you’ll pay tax at the basic rate of 20% on all your income from your second job.

Getting a tax refund

The way the PAYE system works if you have more than one job means that you might overpay tax if the earnings from your main job actually add up to less than the personal allowance. In this situation you will have paid tax at 20% on too much of your other income.

If this happens to you, you will probably have to wait until the end of the tax year and ask HMRC for a refund or wait for HMRC to carry out their tax year-end reconciliation process – in which case you should be sent a P800 tax calculation and a repayment in July/August after the end of the tax year.

You can also contact HMRC at any point to get your tax code corrected, if you think it is not right and if you think you are paying too much tax on any of your jobs.

Taking on a second job can provide extra income for carers and nurses but it’s important to understand how it will affect your taxes.

Keep in mind the personal allowance for 2022-23, which is £12,570, and ensure that you’re not paying more tax than necessary. If you think you may have overpaid tax, consider claiming it back by contacting HMRC to have your tax code amended.

If you would like to comment on this article or have any questions regarding your tax, please contact us on info@superiorhealthcare.co.uk. If you are employed by us – feel free to contact our HR team on hr@superiorhealthcare.co.uk.

There are some great tools online that can help you to work out if you are paying too little or too much such as this two salary tax calculator, and this page at moneysavingexpert with info on how to make a claim to HMRC if you need to recover overpaid tax.