Second job tax question.
Discussion
I'm hoping someone here may be able to help me.
I'm currently employed full time in the military and have recently started driving HGVs at the weekend to earn extra money for my upcomingwedding life sentence.
My basic salary is ~30k, however with various allowances the real wage is closer to 34k, some of these are taxable, some are not.
If I earn enough this year by doing the driving to push me over the high band threshold what implication will this have for me? I was under the impression that as a 2nd job it will automatically be taxed at 40%, all well and good for this FY but would it put on straight on to the higher band next year, even although my 'real' job is still below the threshold?
TIA
I'm currently employed full time in the military and have recently started driving HGVs at the weekend to earn extra money for my upcoming
My basic salary is ~30k, however with various allowances the real wage is closer to 34k, some of these are taxable, some are not.
If I earn enough this year by doing the driving to push me over the high band threshold what implication will this have for me? I was under the impression that as a 2nd job it will automatically be taxed at 40%, all well and good for this FY but would it put on straight on to the higher band next year, even although my 'real' job is still below the threshold?
TIA
Edited by raf_gti on Sunday 2nd May 20:42
You haven't really answered my question about whether the agency are going to be taking you on as an employee or as a self employed driver.
If you are taken on as an employee, they will probably allocate wou a BR tax code (BR = Basic Rate) which means that everything you earn from them will be taxed at a straight 20% (and it will also be subject to 11% Employee's NI if the weekly salary exceed the Lower Earnings Limit each week - curently £110).
If your total combined Gross Salaries are high enough to put you into the Higher Rate Tax Bracket i.e. they exceed £43,875 for tax year 2010/11, then you will also need to pay additional tax at 40% on that part of your income that exeeds £43,875. You may not know wheter you go over this income level until the tax year has actually ended. If that is the case, your tax code for 2011/12 will be altered by HMRC to do two things - one to try and ensure that you pay the correct ongoing tax for 2011/12 and to collect the underpaid tax for 2010/11.
You state that your current coding is 674L. Did you mean 647L?
If you are taken on as an employee, they will probably allocate wou a BR tax code (BR = Basic Rate) which means that everything you earn from them will be taxed at a straight 20% (and it will also be subject to 11% Employee's NI if the weekly salary exceed the Lower Earnings Limit each week - curently £110).
If your total combined Gross Salaries are high enough to put you into the Higher Rate Tax Bracket i.e. they exceed £43,875 for tax year 2010/11, then you will also need to pay additional tax at 40% on that part of your income that exeeds £43,875. You may not know wheter you go over this income level until the tax year has actually ended. If that is the case, your tax code for 2011/12 will be altered by HMRC to do two things - one to try and ensure that you pay the correct ongoing tax for 2011/12 and to collect the underpaid tax for 2010/11.
You state that your current coding is 674L. Did you mean 647L?
Eric Mc said:
You haven't really answered my question about whether the agency are going to be taking you on as an employee or as a self employed driver.
If you are taken on as an employee, they will probably allocate wou a BR tax code (BR = Basic Rate) which means that everything you earn from them will be taxed at a straight 20% (and it will also be subject to 11% Employee's NI if the weekly salary exceed the Lower Earnings Limit each week - curently £110).
If your total combined Gross Salaries are high enough to put you into the Higher Rate Tax Bracket i.e. they exceed £43,875 for tax year 2010/11, then you will also need to pay additional tax at 40% on that part of your income that exeeds £43,875. You may not know wheter you go over this income level until the tax year has actually ended. If that is the case, your tax code for 2011/12 will be altered by HMRC to do two things - one to try and ensure that you pay the correct ongoing tax for 2011/12 and to collect the underpaid tax for 2010/11.
You state that your current coding is 674L. Did you mean 647L?
Thanks EricIf you are taken on as an employee, they will probably allocate wou a BR tax code (BR = Basic Rate) which means that everything you earn from them will be taxed at a straight 20% (and it will also be subject to 11% Employee's NI if the weekly salary exceed the Lower Earnings Limit each week - curently £110).
If your total combined Gross Salaries are high enough to put you into the Higher Rate Tax Bracket i.e. they exceed £43,875 for tax year 2010/11, then you will also need to pay additional tax at 40% on that part of your income that exeeds £43,875. You may not know wheter you go over this income level until the tax year has actually ended. If that is the case, your tax code for 2011/12 will be altered by HMRC to do two things - one to try and ensure that you pay the correct ongoing tax for 2011/12 and to collect the underpaid tax for 2010/11.
You state that your current coding is 674L. Did you mean 647L?
My code is indeed 647L.
I will be employed as a 'normal' employee, certainly not on a self employed basis.
So even if my tax code were to change I shouldn't really worry as it's only whatever is over the threshold that is taxed at that rate?
How do they differentiate between the two incomes? Do I pay the lower rate tax for say 11 months of the year and in the last month pay the higher rate or will I be paying more tax ona monthly basis?
In the first tax year where you have combined income, HMRC may not twig that your salary in the second job has put you into the 40% bracket. If that is the case, they will kep your coding for the second job for 2009/10 at BR (i.e. 20%).
The only way they will find out the true position is when your two respective employers submit THEIR employer's 2010/11 annual return forms (which they are doing right now for tax year 2009/10). They will then get the full picture of your circumstances for 2010/11 and they will realise, perhaps, that some of your income for 2010/11 should have been taxed at 40%.
If that is what happens, they will do two things -
i) they will amend your 2011/12 coding to try and ensure that they tax you correctly under PAYE
ii) they may also amend the 2011/12 coding even further to collect the underpaid tax for 2010/11.
They MIGHT have a stab at correcting your 2010/11 codings BEFORE the end of the 2010/11 tax code. I would pay very careful attention to any tax codings you start receiving once your new job starts.
The only way they will find out the true position is when your two respective employers submit THEIR employer's 2010/11 annual return forms (which they are doing right now for tax year 2009/10). They will then get the full picture of your circumstances for 2010/11 and they will realise, perhaps, that some of your income for 2010/11 should have been taxed at 40%.
If that is what happens, they will do two things -
i) they will amend your 2011/12 coding to try and ensure that they tax you correctly under PAYE
ii) they may also amend the 2011/12 coding even further to collect the underpaid tax for 2010/11.
They MIGHT have a stab at correcting your 2010/11 codings BEFORE the end of the 2010/11 tax code. I would pay very careful attention to any tax codings you start receiving once your new job starts.
Edited by Eric Mc on Tuesday 4th May 18:35
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