Two jobs, double the duty

As more people find a second source of revenue, John Andrew warns of the financial obligations

IN A WORLD of high unemployment, more people than ever have more than one job. The number of second jobs held in the UK last winter was 1,184,000, a 9.3 per cent increase since the previous winter, involving nearly 5 per cent of the working population. Almost three-quarters of them are employees who either have two jobs, typically a day job and one on evenings or weekends, or combine a regular job with a freelance one. The rest are classed as self-employed, but take employment occasionally.

Charles Handy, the management guru, calls individuals who earn a livelihood from more than one job "portfolio people". Necessity rather than choice or greed has been responsible for their growing numbers. Cost-cutting, redundancies and the reluctance to take on full-time employees are all features of the current economic climate.

When juggling a portfolio of jobs, it is essential to be aware of the tax and National Insurance position. Inevitably, it will result in your financial affairs being more complicated than those of a 9-to-5 employee. When you fundamentally change the way you earn your income, it is essential that your local tax office is advised. If you have more than one salaried position, you may find you are due a tax rebate.

Tax affairs become more complicated if the job portfolio includes both regular employment and income from self-employment. Employees have tax deducted direct from salary through PAYE. If you are self-employed (or have a freelance income as well as salary from a day job) you are personally accountable to the Inland Revenue for tax liabilities on those earnings, so you must keep accurate records of transactions. Documents such as invoices, receipts for expenses, bank statements and cheque stubs have to be retained to back up the records. To avoid confusing personal and business expenditure, it is advisable to have a separate bank account for income and expenses relating to self-employment.

At the end of their trading year, the self-employed have to submit their accounts to the Inland Revenue. If this income, or "business turnover", to use the Revenue's jargon, does not exceed pounds 15,000 in a full year, less detailed accounts are acceptable.

Business expenses may be offset against income received. This has the effect of reducing the tax payable. The cost of materials used for the work, postage, stationery and telephone calls are obvious expenses. If a car is used, a proportion of the running costs may well be allowable as a business expense against income. Capital items such as a fax machine, office furniture and equipment are also deductible. However, as these are of a capital nature, only a proportion of the cost is allowed each year.

It does make sense to consider employing an accountant. The annual expenditure (on average pounds 200-pounds 300) could well be recovered through a reduction in tax payable. Not only will an accountant advise on what are allowable business expenses, but he or she will also deal direct with the Inspector of Taxes on your behalf. This not only saves time, but possibly a great deal of stress for those unfamiliar with taxation matters.

There are several classes of National Insurance (NI) contributions. A person who is both employed and self-employed, could have to pay NI contributions in up to three classes.

Employees pay Class 1 contributions for each job where earnings are at least pounds 58 a week, or pounds 252 a month. Contributions are normally collected along with tax under PAYE, and the payments are earnings-related.

The self-employed are normally liable for Class 2 contributions if annual earnings are more than pounds 3,200. Additionally they may have to pay Class 4 contributions if their profits or gains are above a certain limit. Class 2 contributions are payable direct to the Contributions Agency, which is responsible for collecting and recording NI. Class 4 contributions are assessed and collected by the Revenue.

Employees who pay Class 1 contributions in more than one job, or people who are both employed and self-employed, should note that the maximum amount of contributions anyone is required to pay in the current tax year is pounds 2,086.08. The agency has a system for deferring NI payments, which is useful for those who are both employed and self-employed. Refunds are payable to employees with more than one job who have paid too much NI. Anyone who becomes self-employed must advise the Agency with form CF11, Notification of Self-Employment.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Arts and Entertainment
Gregg Wallace in Summer's Supermarket Secrets
tv All of this year's 15 contestants have now been named
Arts and Entertainment
Inside the gallery at Frederick Bremer School in Walthamstow
tvSimon Usborne goes behind the scenes to watch the latest series
Life and Style
A picture taken on January 12, 2011 shows sex shops at the Paris district of Pigalle.
newsThe industry's trade body issued the moratorium on Friday
Winchester College Football (universally known as Winkies) is designed to make athletic skill all but irrelevant
Life...arcane public school games explained
Arts and Entertainment
Could we see Iain back in the Bake Off tent next week?
tv Contestant teased Newsnight viewers on potential reappearance
Life and Style
Silvia says of her famous creation: 'I never stopped wearing it. Because I like to wear things when they are off the radar'
fashionThe fashion house celebrated fifteen years of the punchy pouch with a weighty tome
i100(and it's got nothing to do with the Great British Bake Off)
Angelina Jolie with her father Jon Voight
peopleAsked whether he was upset not to be invited, he responded by saying he was busy with the Emmy Awards
Bill Kerr has died aged 92
peopleBill Kerr appeared in Hancock’s Half Hour and later worked alongside Spike Milligan and Peter Sellers
news It's not just the world that's a mess at the moment...
footballPremiership preview: All the talking points ahead of this weekend's matches
Keira Knightley poses topless for a special September The Photographer's issue of Interview Magazine, out now
The Ukip leader has consistently refused to be drawn on where he would mount an attempt to secure a parliamentary seat
voicesNigel Farage: Those who predicted we would lose momentum heading into the 2015 election are going to have to think again
Arts and Entertainment
Cara Delevingne made her acting debut in Anna Karenina in 2012
film Cara Delevingne 'in talks' to star in Zoolander sequel
Mario Balotelli pictured in his Liverpool shirt for the first time
Life and Style
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Data Scientist (SQL,Data mining, data modelling, PHD, AI)

    £50000 - £80000 per annum + benefits+bonus+package: Harrington Starr: Data Sci...

    SAS Business Analyst - Credit Risk - Retail Banking

    £450 - £500 per day: Orgtel: SAS Business Analyst, London, Banking, Credit Ris...

    Project Manager - Pensions

    £32000 - £38000 Per Annum Bonus, Life Insurance + Other Benefits: Clearwater P...

    KYC Analyst, Birmingham - £200-£250 p/d

    £200 - £250 per day + competitive: Orgtel: KYC Analyst, Key Banking Client, Bi...

    Day In a Page

    Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

    The phoney war is over

    Russian troops and armour pour into Ukraine
    Potatoes could be off the menu as crop pests threaten UK

    Potatoes could be off the menu as crop pests threaten UK

    The world’s entire food system is under attack - and Britain is most at risk, according to a new study
    Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

    Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

    Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
    From Mozart to Orson Welles: Creative geniuses who peaked too soon

    Creative geniuses who peaked too soon

    After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
    Caught in the crossfire of a cyber Cold War

    Caught in the crossfire of a cyber Cold War

    Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
    Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

    Salomé: A head for seduction

    Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
    From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

    British Library celebrates all things Gothic

    Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
    The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

    Is the Hard Rock Café worth fighting for?

    The restaurant chain's owners are currently embroiled in a bitter legal dispute
    Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

    In search of Caribbean soul food

    Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
    11 best face powders

    11 best face powders

    Sweep away shiny skin with our pick of the best pressed and loose powder bases
    England vs Norway: Roy Hodgson's hands tied by exploding top flight

    Roy Hodgson's hands tied by exploding top flight

    Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
    Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

    Di Maria and Ronaldo: A tale of two Manchester United No 7s

    They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
    Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

    Robert Fisk: No victory for Israel despite weeks of devastation

    Palestinians have won: they are still in Gaza, and Hamas is still there
    Mary Beard writes character reference for Twitter troll who called her a 'slut'

    Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

    The Cambridge University classicist even wrote the student a character reference
    America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

    America’s new apartheid

    Prosperous white districts are choosing to break away from black cities and go it alone