According to the Office of National Statistics (ONS), over 1.1 million people in the UK currently work a second job, and they work roughly 10 hours per week on average.
Regulations on Working Hours
This is true for both employees and workers (including freelancers who are classed as workers). The law specifies that you can only work a specific number of hours per week (an average of 48 hours per week), but you can opt-out of this working hours limit if you wish to.
If you will be working more than 48 hours per week due to a second job, your employer should ask you to sign an Opt-Out agreement and monitor the number of hours you work per week.
This will primarily apply to employees (it would be very unusual for a freelance contract to contain the clauses that we explain below).
While employees are not required by law to reveal any other job to their employers, many employers will prevent you from working elsewhere through a condition in your employment contract. Such clauses are likely to exist in order to prevent you from:
- doing anything that may result in a potential conflict of interest for your Employer;
- doing anything that could bring your employer into discredit;
- infringement against the Working Time Regulations.
However, whether these terms are there or not, you will normally be needed to acquire written authorisation from your employer before engaging in any other sort of paid or unpaid employment outside of your typical working hours.
Implications for taxation
If your second employment is on a PAYE basis (whether you are hired directly or through an agency), you will not be allowed to offer your second employer a P45 when you start, so you will need to fill out a P46. Your employers will notice that you have disclosed that you have another employment, but you are not required to inform them how much you are paid.
Your yearly tax-free personal allowance is normally only applied to your main work, and tax is deducted appropriately, though you can request that HMRC split the amount between employment. You will be assigned a tax code for each employment, and it is common to be assigned a BR (basic rate) tax code for your second employment.
It's critical to ensure that the correct tax code is being used for each, so check your payslips if you have numerous tax codes or believe you're paying too much tax, and call HMRC to ensure you understand what's going on and that you're being taxed appropriately. You may also be required to file an annual Self-Assessment tax return.
Those who receive Child Tax Credits or Working Tax Credits should also think carefully before taking on a second job. Tax credits are determined based on your expected income at the beginning of the year, and additional income from a second job will diminish your future claim.
You should also examine the tax earnings thresholds. If your total income exceeds one of the thresholds, you may be required to pay more tax than anticipated, which could result in a nasty surprise when it comes time to file your tax return.
If your second employment is on a Freelance self-employed (non-PAYE) basis, you must notify HMRC so that your freelance income may be accounted for, and you will very certainly be required to complete an annual Self-Assessment tax return.
Persona Finance can assist you in completing your self-assessment; please contact them at [firstname.lastname@example.org].