Many of us have thought about getting a second job, especially when trying to pay off debt, save for a big event, like a wedding. Or, be more comfortable at the end of the month. Earning two incomes may seem attractive, but it will require a great deal of effort and work. We look at whether it’s a good idea to secure a second job while already working full-time.
No doubt, a second job will be physically demanding, so this is a very important consideration when deciding whether the risks outweigh the benefits. Having more than one job can strain your physical and mental health. Being too busy may even make you less effective in both roles. When you take on a second job, you may have less time to unwind, less time to sleep. You won’t be able to recover between the two roles. This may be easier to maintain for a short time, but it will be hard to maintain long-term. It is also inevitable that personal relationships will suffer from the lack of time available. Granted, it is more sustainable to take on two part-time jobs than to take on a full-time role and another job on top of that.
Check Your Contract
Before considering additional work, check your existing contract. Contracts sometimes include clauses about additional work. Check also to see if there are any provisions for the hours and locations you should be available to work. A clause such as this may limit your options. There may also be terms in your contract that would prevent you from working with a competitor part-time. If there is no mention about a conflict of interest or second job, your current employer cannot stop you from taking one on. There is a cap on the working week in terms of hours, which is 48 and often referred to as ‘working time regulations’. Read more about it on Gov.uk, including the exceptions.
Impact On Tax
A certain amount of money can be earned without paying tax. This is called the Personal Allowance, which is £12,570 for the 2021/22 tax year. It is usually better to apply your Personal Allowance to the job that pays the most – since you only get one. When you do two jobs, you can split your Personal Allowance as long as neither of your incomes exceeds £12,570 per year.
For example, having an earning of £14,000 on your first job and £6,000 on your second will grant you personal allowance. There will be income tax on the £1,430 of pay above the allowance on the main job at a basic rate of 20%. This will be in addition to all the second job income. Splitting the allowance between two jobs is possible if both jobs are below the Personal Allowance. You can ask HMRC to transfer any unused allowances from one job to another, or you can request a refund at the end of the tax year.
When combined earnings create income of over £50,000, with all the personal allowance being applied to the first job, all income from the second job will be taxed at the basic rate (if HMRC is unaware), even if some should be taxed at the higher rate. It is imperative you communicate accurate salaries, along with your tax codes, to avoid paying this extra tax at year’s end.
Inform your insurer if you change jobs or work part-time, additionally. Applying for new life, house, or medical insurance can affect your premiums when you have two occupations. On the flip side, it does not matter if you take on a new high-risk or low-risk role when in a current policy, your insurance premium will not change. If your second job involves driving, for example, a delivery job, this can raise your current rates.
If you’re looking for other helpful ideas on how to budget, click here for articles on spending wisely and creating a budget you can stick to.