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Do You Need to Tell HMRC About Additional Income When You Have a Second Job? | How to declare your second income on your Self-Assessment tax return.

Do You Need to Tell HMRC About Additional Income When You Have a Second Job? | How to declare your second income on your Self-Assessment tax return.

Mike Wakeford

If you have recently taken on a second job which is classed as a second income, you may need to tell HMRC about the additional income, as it can impact your income tax obligations.  

How can you inform HMRC about extra income?
An online tool allows taxpayers to check if they need to notify HMRC about additional income within their self-assessment tax return. The online tool can be found here.

This could include additional income from:
  • selling goods, for example, at car boot sales or auctions or online;
  • Undertaking casual jobs such as gardening, food delivery or babysitting;
  • charging other people for using your equipment or tools; and
  • renting out a property or part of your home, including for holidays (for example, through an agency or online).
  • Creating content online, for example, on social media
In most cases, these types of additional income are taxable. However, two separate annual £1,000 tax allowances exist for property and trading income. If you have both additional income types highlighted below, you can claim a £1,000 budget for each. The online tool will indicate if this is relevant.

The £1,000 Rule
The £1,000 allowance applies to:

If you make up to £1,000 from self-employment, casual services (such as babysitting or gardening) or hiring personal equipment (such as power tools). This is known as the trading allowance.

Suppose your annual gross property income is £1,000 or less; you will not have to tell HMRC or declare this additional income on a self-assessment tax return from one or more property businesses. For example, from renting a driveway. This is known as the property allowance.
Where each respective allowance covers all the individual’s relevant income (before expenses), the additional income is tax-free and does not have to be declared. Taxpayers with higher amounts of income will have the choice, when calculating their taxable profits, of deducting the allowance from their receipts instead of deducting the actual allowable expenses.

What taxes do you need to pay for a second job?

If you have a second job, you will need to pay additional income tax (if your total income is above the personal allowance) on your secondary source of income. As well as this, if you earn more than £242 per week, you have to pay class 1 (and possibly Class 1A) national insurance during this tax year. Ordinarily (in the absence of other factors), this will not mean you need to complete a self-assessment tax return.

Suppose you are self-employed and your income exceeds the £1,000 allowance, in that case, it's essential to make sure that you registered for self-assessment and include this additional income on a self-assessment tax return. An example of how this may affect your taxable income is as follows. You're earning £45,000 from your main job and running a rental property as a side business, earning £14,000 per year after taxable allowances. You must declare this £14,000 income on a self-assessment tax return and pay any tax that HMRC says you owe. You may also find that due to your rise in income, you're pushed into a higher tax bracket. If we go back to our example in this situation, your additional income means earning £59,000. Your additional income from your rented property has pushed you into the higher tax bracket, meaning you will go from paying the basic rate of 20% to the higher rate of 40% on any income that exceeds the basic rate income band.

Contact Us
For more information and support about filing your Self-assessment tax return and the supporting documents. Contact a member of our specialist tax team today.