tax stuff

[Arch]

I'll probably have to go down to the tax office to check this out, but I always like to make use of the many experts we have on here...

I'm job hunting, right, and looking for a part time job. I'm also going to be employed, for one day a week, by a friend in his business. We need to work out the best way for him to pay me. I've heard that if I have 2 jobs PAYE, I get taxed more proportionately on the second one. On the other hand, if I work for my friend self employed, and he is my only self employed client, that's a no-no. Also, I would tend to prefer not to have to work out my own tax and stuff. Anyone able to clarify/confirm in layman's terms? Is having two jobs PAYE going to make trouble for any employer I get a main job with? It's not so much that I want to avoid any tax, I just want the most straightforward way to sort it all out, and not be doing anything wrong....

 

[velocidad]

glad it's not just me that's in the dark on tax and financial type stuff. i would have thought that you can only pay tax on what you earn (over and above your personal allowance) and it shouldn't matter whether that's from one job or half a dozen. that does seem too simple though ;-)

cheers, velocidad.

 

[Arch]

glad it's not just me that's in the dark on tax and financial type stuff. i would have thought that you can only pay tax on what you earn (over and above your personal allowance) and it shouldn't matter whether that's from one job or half a dozen. that does seem too simple though ;-)

cheers, velocidad.

I gather from a friend here, who once had 3 jobs, that she got taxed more on the second and third - but she's not sure if it still applies.

 

[LordoftheTeapot]

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/WorkingAndPayingTax/DG_10010537

 

[velocidad]

ah, right, i see. that's a bit poo then :-(

 

[LordoftheTeapot]

If tax was simple there wouldn't be any need for the highly paid tax experts. Infact the UK has one of the most complicated tax systems in the world

 

[Speicher]

At one stage, a few years ago admittedly, I was doing work for three different employers on a PAYE basis.

If you know how much you expect to earn from each employer, you can "split" your tax-free allowance accordingly, and/or the 10p in the pound bracket, or be taxed at "normal" tax. You then have a different tax code for each employer.


HOWEVER BE CAREFUL

YOU must keep a close eye on your National Insurance Contributions.

Most weeks I earned more than the "lower earnings threshold" for National Insurance. But this was with all the earnings taken into account.

Individual employers will not deduct National Insurance Contributions, if your earnings are low. This has very important/drastic effects on your pension, possible future claim for incapacity benefit etc etc. This is not the place for me to give details of my situation.

If you earn more than £80 a day, for instance, from the one employer who you only work one day a week for, you will strangely enough still be paying less NI than you should. I would suggest you seek advice from someone who is an expert on this. Bear in mind that the Inland Revenue people just know about tax, and the Contributions Agency, in Newcastle just know about NI. You will need someone who knows about BOTH.

 

[cisamcgu]

I think that your personal allowance can only be applied to one (your main) job. Any other employment is taxed with no personal allowance. Is is possible to claim any over paid tax back at the end of the financial year -assuming that the first job did not pay more than the personal allowance, if it did, then no tax would be reclaimable.

i.e Job (1) - taxed as normal with the £5,225 tax free allowance.
Job (2) taxed with no tax free allowance.

If, at the end of the tax year, job (1) has paid less than £5,225 then you can claim some back; if however job(1) has paid more than £5,225, then nothing can be reclaimed.

From the .gov site
"If you work for more than one employer
If you work for more than one employer, you'll get a special tax code to take this into account.

Your tax allowances will normally be given against the pay from your main job. Your other job(s) will be taxed at the basic or higher rate, depending on your total income."


I hope this is clear(ish)

Andrew

 

[Arch]

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/WorkingAndPayingTax/DG_10010537

Cheers, I'll read that in depth after lunch... That's something to look forward to...

I think my priority (apart from having enough to pay the rent and eat) is to have as simple a life as possible, so it may be more sensible to just go down the PAYE route...

 

[Speicher]

Further to my above info.

One employer could charge you tax based on you earning less than the tax free allowance (£4,000 ish) combined with the 10 pence in the pound tax band. (£2000 ish).

The other employer would tax you on the "normal" tax band for all your earnings

Which is what cisamcgu is saying.

 

[Arch]

Oh, and cheers Speicher and cisamcgu. That confirms more or less what I thought...

 

[fossyant]

There is a good chance you will have to work out your own tax with two jobs.

Depending upon what you earn - anything over £5,225 starts to get taxed. The first £2k over the allowance is taxed at 10% then 22% for the rest. It's likely that you'll only get the allowance applied to one job, and the other job earnings taxed in whole.

There is a good chance you might pay a little too much tax, but provided the allowance goes against your main job (i.e. the one that pays the most in the year), then you'll be paying over the right amount.

E.g. Job 1 pays £7k per year, Job 2 pays £4k per year.

Tax on job 1 would be £7k - £5k = £2k of which is taxed at the rates applicable (I won't go into the 10% / 22% bands as this is confusing)

Tax on Job 2 would be £5k taxable

Because in Job 1 you earn more than the tax allowance, you'll be paying over the correct tax. If that job earned less than the allowance, then you'll be paying over the odds on job two - only when you do a tax return or the Revenue works it out, will your tax codes get adjusted, and you can claim some of the tax back.

Without going too into it, does that help a bit.

 

[Speicher]

Oh, and cheers Speicher and cisamcgu. That confirms more or less what I thought...

If you want to go down that route, do not leave it longer than necessary to set up. If you apply too close to the end of the tax year, they may not do it. Any tax that you overpay, will probably not be paid back until about NOVEMBER.

 

[beanzontoast]

If you want to go down that route, do not leave it longer than necessary to set up. If you apply too close to the end of the tax year, they may not do it. Any tax that you overpay, will probably not be paid back until about NOVEMBER.

Or January in my son's case .

 

[ChrisKH]

What all the others have said. Pretty much the usual routine is for your tax code/allowances to be given against your primary job and a B.R. (basic rate) tax code against your secondary job. It gets complicated if you are earning less than £5,225 a year in the primary job (which is a real possibility if as I recall you were looking just to cover costs) as you would want the remaining allowances to go against your secondary job, rather than wait until the end of the (tax) year to get a refund. If you have any other taxable income, it becomes even more complicated. A couple of tips:-

1. To utilise your allowances as quickly as possible ask the primary job's payroll department for their (and now your) PAYE tax office address, PAYE reference number and the phone number for this office. This along with your National Insurance number is all you will need to contact your main PAYE scheme office to amend your tax code which they will do on your request if you sound like know what you are talking about. Ditto second job. A couple of phone calls should be all that is required to split your allowances between jobs if this is an issue. Don't let them fob you off.

2. Don't go down the self-employed route - you are right insofar as doing work for one person doesn't make you self-employed.

3. Unlikely you will get away with not filing a tax return in your year of commencement as there will be, possibly, unused allowances so it would pay to complete a draft tax return on-line (which if your details are quite simple is quite simple) to see if you owe any tax or are due a tax refund. Self assessment means quite simply that; it is now your responsibility to keep your tax affairs in order.

Going forward as fossyant says you may have to continue to file a tax return because you have two sources. If so, just get online (search on inland revenue and look up self-assessment) and register. It is not that difficult once the tax year has finished to file a return electronically. The truth is that the Inland Revenue don't want people to do this as it creates extra work for them but I would recommend it if you are just leaving Uni/post-grad or this is a first job as you may have unused allowances brought forward which could put you in a tax repayment situation.

Let me know if I can be of any specific help.