I’d Like A Second Job – What Do I Need To Know? - More Than Accountants

I’d Like A Second Job – What Do I Need To Know?

It is undeniable that more and more professionals are now searching for second jobs or any extra source of income by simply “moonlighting.” Most often, they do this on a casual basis or on a freelance. Sometimes the role that they would take may not be associated with their principal job. Usually, the reason behind this is they require some extra income but sometimes they just want to satisfy other interests which cannot be done by their main job.

Based on the data from The Office of National Statistics (ONS), in the UK more than 1.1 million people are having their own second jobs. In fact, on average, they work almost 10 hours a week. Nowadays, several companies are interested in hiring people who can work for short hours to help them in their business needs rather than hiring a more costly full-time or part-time employee.

For some people obtaining a second job is a necessary thing to do while for others it is a great thing to do. Although it is not illegal to get a second job, yet there are a lot of issues that you need to consider to avoid risking your main source of income.

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Due to the coronavirus pandemic, workers and employees are permitted to take Emergency Volunteer Leave in two, three, of four weeks in bulk. This is based on the government announcement on March 17, 2020, which deals with the coronavirus draft legislation. This is considered as statutory unpaid leave but with pay for the loss of earnings and expenses incurred at a fixed rate. This is applicable for those who volunteer through the proper authority.

Working Time Regulations

This is applicable to workers and employees as well as freelancers who are classified as workers. Based on the law, you only need to work for a certain number of hours every week. On average, it would be 48 hours each week. Although it is fine if you want to Opt Out from this working hours limit. If you are working for more than 48 hours per week due to a second job then it is necessary that your employers must sign an Opt Out agreement, also they should keep track of the number of hours that you’ve worked in a week.

In case they think that the long hours of work has greatly affected your ability to accomplish your main job, for instance, you arrived late, you are not working productively, you feel tired making you prone to accidents, make more absences and so on, then they will likely talk to you regarding your performance.

Contractual Requirements

This is applicable to most employees. Although it is quite rare for a freelance contract to include the following clauses.

Perhaps you might think that you can do whatever you want outside of your normal working hours however this is not usually the case!

Although employees are not legally obliged to reveal any other employment to their employers, yet most employers will prevent you from working outside based on a clause in your contract of employment.

These clauses will likely prevent you from doing the following:

  • You should not do anything that can cause any conflict of interest for your Employer. For instance, you are prohibited from working with a rival company or a competitor. Also, you should not work for a company that is either a supplier or a client of your employer.
  • You must not do anything that could result in a disgrace to your employer. For instance, you work as a lap dancer, while working something more official during the day.
  • You should not commit any violation of the Working Time Regulations.

Nevertheless, with or without these clauses, you will always be required to get written permission from your employer before you can start engaging in any type of work outside of your regular working hours, whether it is paid or unpaid. Most often, your clause will include a statement which tells you that in case you fail to declare any such activities then you will be subject to disciplinary actions.

A Guide In Freelancing On The Side

Additionally, the clause may also declare that the employer has the right to withdraw its permission in case your work begins to suffer and there is no other explanation for this. If your contract includes this clause, then it is binding you. Take note that you are required to follow this otherwise you will be violating your contract.

When this happens, you are giving your employer the grounds to apply for an injunction to stop the continuing breach. Or you are giving your employer the grounds to terminate you fairly if you decline to give up the other work.

Hence, it is important that you should be open with your employer when it comes to your other life. They might consider this as a good way of developing your other skills. Since this can motivate you then they won’t have any problems with your second job at all.

On the other hand, if your employer thinks that you are working with another company during your normal working hours and maybe use their resources, then this could lead to severe consequences. Most often, contracts include an express clause which requires their employees to dedicate all their time and attention to their employers business during regular working hours. During these circumstances, your employer might instigate disciplinary action. Even if this express clause is not found in the contract, the employee could still be in breach of the presumed duty of fidelity otherwise known as the duty of good faith.

Moonlighting While On Long-Term Sick Leave

It is a common practice for employees on long-term sick leave to look for additional income from another work in order to supplement their sick pay. Naturally, employers will quickly assume that they can either dismiss or discipline this employee based on the dishonesty of the employee. Nevertheless, your employer must determine if your illness is caused by the job that you do for them then they might not prevent you from doing other work.

Tax Benefit Implications

Take note that your second job will still require you to pay some taxes including National Insurance contributions. However, there won’t be any separate tax rate for a second job. In case, the second job that you choose is on a PAYE basis, whether you are employed through an agency or directly, you can’t provide your second Employer with a P45 once you have started your second job. What you can do is to fill in a P46.

Your employers will know that you have another job because you have declared it. However, you are not obliged to reveal how much you are earning.

Keep in mind that you can only use your tax-free personal allowance each year on your main source of income and your tax deduction will be computed respectively. Even though you can still request HMRC to divide the allowance between your multiple jobs. For every job, you will obtain a tax code. For your second job, you will usually be given a BR tax code or basic rate tax code.

It is vital to verify if you are using the right tax code for each job. Hence, if you have multiple tax codes, then you must check your payslips. If you believe that you are paying too much tax, then you have to contact HMRC right away. They will check if you have understood everything and if you are being taxed correctly. You should also be aware that you have to fill in an annual Self-Assessment tax return.

If you are one of those people who are receiving Working Tax Credits or Child Tax Credits, then you should think about your present circumstance carefully before you decide to take on a second job. At the beginning of the year, your tax credits will be computed based on your estimated income. However, if you have any extra income from your second job, then this can help in reducing your future entitlement.

The tax earnings thresholds are also important factors that you should consider. In case your total income is more than one of the thresholds then you will have to pay more tax than you’ve expected. As a result, you can have a big surprise during Self Assessment time.

If you decide to take a second job and it is on a Freelance basis or non-PAYE, then you must inform HMRC about this. In this way, your freelance earnings will be accounted for. Most likely, they will ask you to complete an annual Self-Assessment tax return.

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