Everything You Need to Know About Tax When You’re Earning Extra 💸📚

💼 Got a Second Job or Side Hustle? Here’s What That Means for Your Tax 💸 

 

Taking on a second job or starting a side hustle is an awesome way to earn extra cash, but it can affect the amount of tax you pay. Whether you're working weekends, freelancing online, or launching your own small biz, here’s what you NEED to know 👇 

 

🔢 1. Do I have to pay tax on my second income? 

 

Yes, you usually do. The key thing to remember is your Personal Allowance. That’s the amount of money you can earn tax-free each year, and for most people in the UK, it’s currently £12,570 (2024/25 tax year). 

 

BUT… you only get this allowance once. So even if you have multiple jobs, you don’t get a fresh allowance for each one. 

 

💡 2. Two Jobs – How it Works: 

 

Let’s say you earn: 

 

£25,000 from your main job (e.g. full-time marketing) 

 

£6,000 from your second job (e.g. evening bar work) 

 

✅ Use your Personal Allowance on the job that pays the most (your main one). 

 

✅ That means: 

 

£12,570 is tax-free 

 

£12,430 (the rest of your main salary) is taxed at 20% 

 

The full £6,000 from your second job is also taxed at 20% 

 

📌 You don’t pay National Insurance twice on the same income, but you might pay it again at the secondary threshold if your side job pushes you over certain limits. 

 

📉 3. What if BOTH jobs pay less than the allowance? 

 

Example: 

 

Main job: £10,000 

 

Second job: £6,000 

 

You won’t pay tax on the main job, it’s under your allowance. You could get HMRC to apply the remaining £2,570 of your allowance to the second job. Otherwise, you'll get taxed on the full £6k, but you can reclaim the overpaid tax at the end of the year via a refund. 

 

📈 4. What if I earn over £50k total? 

 

Example: 

 

Main job: £48,000 

 

Second job: £14,000 

 

➡️ Combined income = £62,000 

 

In this case, part of your earnings will fall into the higher-rate tax band (40%). Here's the breakdown: 

 

£0–£12,570: tax-free 

 

£12,571–£50,270: taxed at 20% 

 

Anything over £50,270: taxed at 40% 

 

📣 IMPORTANT: HMRC might not automatically know to charge 40% tax if each employer thinks you’re only earning under the threshold. You could underpay without realising it, so it’s crucial to update your tax code or file a Self Assessment. 

 

🧾 5. Side Hustle as Self-Employed? 

 

If you’re working full-time but making extra money as a freelancer, content creator, tutor, Etsy seller—anything where you’re not paid by an employer, you’re technically self-employed. 

 

If your side income is over £1,000 a year, you:  

 

✅ Must register for Self Assessment 

✅ Need to submit a tax return 

✅ Will pay Income Tax AND Class 2/4 National Insurance depending on your profits 

 

You’ll pay tax on your self-employed earnings AFTER your Personal Allowance is used up. If your allowance is already used on your full-time job, all of your side hustle earnings will be taxable. 

 

🚨 6. What Happens If I Don’t Tell HMRC? 

 

If you’re employed by two companies, most of the time tax is sorted through PAYE. But if you: 

 

Cross into the higher-rate tax band 

 

Don’t give accurate info when starting your second job 

 

Are earning through self-employment 

 

…then HMRC won’t know to charge the correct tax—and that means you might owe money at the end of the year. 😬 

 

🛠️ 7. How to Keep It All in Check: 

 

✅ Use your tax code wisely, apply your Personal Allowance to your main job 

✅ Check your payslips and tax code regularly 

✅ Register for Self Assessment if you’re self-employed 

✅ Keep records of all your income 

✅ Use HMRC’s tax calculator to estimate what you’ll owe 

✅ Set aside money monthly if you’re expecting a tax bill later 

 

💬 Final tip? Don’t panic! It might feel confusing, but the key is to stay informed and organised. Need to adjust your tax code or register for Self Assessment? 

 

HMRC’s website makes it easy—and you can always speak to them directly. 

 

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💡 Got questions? Drop them in the comments! 

 

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