How Tax Works with Two Jobs

Summary

When you hold two jobs simultaneously in the UK, each employer runs PAYE independently. Your personal allowance (£12,570) is typically allocated to your main job, and the second job is taxed from the first pound using a BR (basic rate) or D0 (higher rate) code. The calculator combines both employments to show your true total tax liability and highlights whether you are being over- or under-taxed.

How it works

Tax code allocation

HMRC issues a separate tax code for each employment:

• Primary job (usually the higher-paying one): gets the full personal allowance, typically code 1257L
• Secondary job: usually gets a BR code (20% on all earnings) or D0 code (40% on all earnings), meaning no personal allowance

You can ask HMRC to split your personal allowance across both jobs if you prefer.

Why overtaxation happens

Common scenarios that cause too much tax to be deducted:

1. Both employers given 1257L — your personal allowance is used twice, leading to underpayment
2. Emergency tax on second job — temporary high deductions until HMRC issues the correct code
3. Combined income crosses a threshold — neither employer knows about the other’s pay, so neither applies the higher rate correctly

National Insurance

Unlike income tax, NI thresholds apply per employment, not in aggregate. Each job has its own primary threshold (£12,570/year). If neither job exceeds the threshold, no NI is paid — even if combined income would normally attract NI. Conversely, you might pay NI on both jobs even though combined income would result in less NI if it were a single employment.

Worked example

Job 1: £30,000/year (code 1257L), Job 2: £15,000/year (code BR)

Job 1 tax:

1. Taxable: £30,000 - £12,570 = £17,430
2. Income tax: £17,430 x 20% = £3,486
3. Employee NI: (£30,000 - £12,570) x 8% = £1,394

Job 2 tax:

1. Taxable: £15,000 (no personal allowance with BR code)
2. Income tax: £15,000 x 20% = £3,000
3. Employee NI: (£15,000 - £12,570) x 8% = £194

Combined:

• Total gross: £45,000
• Total income tax: £6,486
• Total NI: £1,588
• Total net: £36,926

If it were a single £45,000 job:

• Income tax: (£45,000 - £12,570) x 20% = £6,486 (same)
• NI: (£45,000 - £12,570) x 8% = £2,594 (more NI)

In this case, having two jobs actually results in less NI because each job’s NI threshold is applied separately.

Inputs explained

• Job 1 salary — gross annual salary from your primary employment
• Job 2 salary — gross annual salary from your secondary employment
• Tax codes — the code allocated to each job (determines personal allowance allocation)
• Tax year — determines rates and thresholds

Outputs explained

• Combined tax liability — total income tax across both jobs
• Per-job breakdown — tax, NI, and net pay for each employment
• Over/underpayment — whether the current codes are collecting too much or too little
• Optimal code allocation — the most tax-efficient way to split your personal allowance

Assumptions & limitations

• The calculator assumes both jobs are PAYE employment, not self-employment.
• NI is calculated per employment. Employees with two jobs where neither exceeds the primary threshold may pay less NI than a single-job equivalent.
• Student loan repayments are deducted from the primary employment only (the one with the SL code suffix).
• If combined income exceeds £100,000, the personal allowance taper affects total tax but neither employer accounts for this automatically.
• HMRC may take several months to issue the correct tax codes for a new second job.