Second job tax calculator — methodology

The calculation, in order

1. Add the two salaries. Compute income tax once on the total.
2. Compute income tax on the main job alone.
3. Subtract. The difference is the income tax the second job adds.
4. Compute employee National Insurance separately on each job’s own pay.
5. Compute it once more on the combined pay, as a single employment, for the comparison.

incomeTax(main + second)                     ← one calculation, one allowance
tax on the second job = incomeTax(main + second) − incomeTax(main)

nationalInsurance = employeeNI(main) + employeeNI(second)      ← per employment
if it were one job  = employeeNI(main + second)

The only operations this page performs are those subtractions and one division to express a cost as a share. Every tax and National Insurance figure is returned by an engine.

Why the second job’s tax is a subtraction and not an allocation

The tax system never attributes a bill to one of two incomes: the pounds are not labelled, and no calculation anywhere in the legislation produces “the tax on your second job”. So any figure under that heading is a convention, and the honest thing is to say which one.

The convention here is the second job sits on top: the bill with it, less the bill without it. Done the other way round — the bill without the main job, subtracted from the total — the second job would look much cheaper, because the main job would be charged with the higher-rate band that only the combination reaches. Both are arithmetically defensible; neither is a fact about the tax system. The first answers the question a reader is actually asking, which is what taking on the second job did to their bill.

BR is a code, not a rate — and it is wrong in both directions

A BR code (SBR in Scotland) instructs a payroll to deduct the basic rate on every pound of that employment: no personal allowance beneath it and no higher band above it. It exists for a good reason — the allowance is already set against the main job, and giving it twice would under-tax the reader by a whole allowance — but it is a single flat instruction operated by an employer that cannot see the other job.

So it collects the right amount only inside one window: the main job uses the whole personal allowance, and the two together stay inside the basic-rate band. Outside it:

• Combined income reaches a higher band and BR collects too little. On £45,000 plus £12,000 in England it deducts £2,400.00 against £3,746.00 due — a shortfall of £1,346.00 that HMRC collects later.
• The main job leaves personal allowance unused and BR collects too much, because it applies no allowance at all. This is the direction nobody is warned about, and it is common for part-time main jobs and for jobs started part-way through a year. The remedy is to ask HMRC to split the allowance across both employments.

The rate the code charges is read out of the rules file by name — the band called Basic rate in the region’s own earned schedule — and not by taking the first band. In England, Wales and Northern Ireland the basic rate is the first entry; in Scotland it is the second, because the starter rate comes first. Indexing would charge a Scottish reader the starter rate and would do it silently. Today that lookup finds Basic rate at 20.00%.

Income tax is charged on the person; National Insurance on the employment

That asymmetry is the whole of the interesting part. Class 1 National Insurance is worked out by each employer on the pay it gives, against thresholds it applies afresh. Nobody adds the two together. So:

• Below the upper earnings limit, splitting saves. The £12,570 primary threshold is available in each employment, so a second job earns a second run of nil-rate pay. On £45,000 plus £12,000 the total is £2,594.40 against £3,150.60 for the same money in one job.
• Above it, splitting costs. The rate falls to 2.00% above £50,270, and that discount is reached in each job separately. Two jobs of £70,000 pay £6,821.20; one job of £140,000 pays £4,810.60.

The rule has a limit, and it is not a small one. Where two employments are with the same employer, or with employers carried on in association with one another, HMRC requires the earnings to be aggregated and National Insurance computed on the combined figure. That removes the difference entirely. This page cannot tell whether it applies and says so beside the figure rather than only here.

Rates, thresholds and allowances

Every National Insurance figure above is UK-wide and is HMRC’s published annual threshold rather than a weekly figure multiplied by 52. The same gov.uk table publishes both and they disagree by enough to change an answer; packages/tax-core/VERIFICATION.md records the trap.

Sources

• gov.uk — Tax codes: if you have more than one jobThat a second job is normally put on BR, D0 or D1, and that these apply a single rate to all of that employment’s pay with no personal allowance. Cited for the mechanic this page exists to correct.
• gov.uk — Income Tax rates and Personal AllowancesThat income tax is charged on total income for the year, with one personal allowance — which is the whole reason there is no second job rate.
• gov.uk — National Insurance: how much you payThe per-employment basis of Class 1, and what happens where somebody has more than one job.
• gov.uk — Rates and thresholds for employersHMRC’s published ANNUAL National Insurance thresholds, which are deliberately not the weekly figures multiplied out.
• gov.uk — Check your Income Tax for the current yearWhere a reader can see which code HMRC has against which employer, which is the fact this page cannot know and the reader can.
• gov.uk — Income tax rates and allowances: current and pastThe personal allowance, its taper, and the band structure for each region.

Six things this calculation does not model, stated here rather than buried

• Part-year employment. Every figure is a full tax year at the salaries entered. A second job started in October is charged on what it actually pays in that tax year, and real PAYE is operated cumulatively rather than as a twelfth of the annual bill.
• Aggregation of connected employments. The National Insurance finding holds only for genuinely separate employers. Same employer, or employers carried on in association, and the earnings are aggregated.
• The student loan behind the repayment — its balance, the interest charged on it and the write-off date. The repayment itself is modelled, per employment and against a threshold applied in each job, so a borrower with two jobs is deducted less than one with a single job on the same money — by the same mechanism as the National Insurance difference above, and with the opposite consequence, because HMRC reconciles a borrower’s total income after the year ends and asks for the difference.
• Pension contributions, salary sacrifice, benefits in kind, and any adjustment an existing tax code carries for an earlier year’s underpayment. A code is frequently doing more than one thing at once.
• Anything that is not an employment. Self-employed profit bears Class 4 rather than Class 1 and is reported through Self Assessment; savings interest, dividends, rental profit and a pension in payment are all outside this page. The income tax half of each of those is the same idea — one total, one allowance — and the pages that price them are linked from the calculator.
• Employer National Insurance, which each employer pays on its own payroll and which is a cost of the employment rather than a deduction from pay. The National Insurance calculator shows it; this page deliberately does not rebuild it.