Income Tax and More Than One Job

A frequent question for taxpayers is how the Personal Allowance is allocated when they have more than one job. ICB highlights HMRC guidance which explains how Income Tax and tax codes work in this situation.

If there are two or more sources of taxable income, Income Tax liability is calculated on combined income.  Based on employment information HMRC are aware of, they will attempt to collect the liability via a tax code or multiple tax codes across the different employments. 

ICB wants to alert members to this guidance which, in turn, they may choose to pass onto their clients.  It is separated into logical sections:

• ‘Income Tax and your Personal Allowance’ covers the basics that there is only one Personal Allowance (£12,570) and HMRC issue a tax code that reflects the allocation and is used by the employer;
• ‘Tax codes when you have more than one job or pension’ explains how a tax code in one employment may be different than in another employment, using the example of the BR and D0 code;
• ‘Starting and leaving jobs’ explains the importance of the Starter Checklist and how a taxpayer should indicate that they have another job;
• ‘If you have more than one job working as an employee’ explains the Personal Allowance is usually allocated to the job that pays the most.  However, it explains an employee should contact HMRC to see if it can be split between jobs.  See also the guidance ‘Tell HMRC if you have a new job or more than one job’ which is aimed at taxpayers;
• There are several sections covering different employment types:

o   ‘Temporary, casual, seasonal or short-term work as an employee’;

o   ‘Casual self-employed work or side hustles and working as an employee’; and

o   ‘Getting a pension and working’

For the employee who has more than one job, it is important they check HMRC have the correct details and they can do this via the Personal Tax Account or the HMRC app.  It is important employees remember that Income Tax is a personal liability and responsibility and they can use these if HMRC’s records are incorrect, for example, maybe not all employments are listed or there are too many employments listed.

For Bookkeepers 

Hopefully, this clear guidance from HMRC will give employees the information they need to be able to query how their tax is calculated if they have more than one income source.  ICB is pleased to communicate this to members.