Is it worth getting a second job?
With tough economic times many people are turning to a second job to keep their family’s head above water. Others are saving for a big holiday or deposit for a home. So what are the tax implications of working another job and is it worthwhile?
At first you may think no, as when you get the pay packet from your second job it may seem like you’re paying a higher rate of tax. This may seem grossly unfair but it’s actually just an accounting thing. The fact is that you can only claim your tax-free threshold from one employer. It makes sense to make the claim from the employer who pays you the most — your primary source of income — but this means that you will pay tax on every dollar you earn at your second job.
You need to ensure that you let your employer know that you will not be claiming the tax-free threshold on the money you earn. Also, it’s worthwhile checking that you are getting paid correctly. Sure, it may seem great to get the extra income in the short-term, however when it comes to tax time you will be hit with a hefty bill.
Before signing up for a second job, you should check your primary employer’s policy on the matter. Technically, you don’t need to tell them about a second job; after all, you can do whatever you want in your own time, but there can be benefits to letting them know. Letting the boss know that you’re thinking about moonlighting might be a wake-up call that a pay rise is necessary.
Alternatively, he or she may be able to offer you extra paid hours in your primary job, saving you a lot of stress and hassle.
Of course, there’s risk involved in laying your cards on the table. Knowing that you’re working a second job might also make them think that you won’t have energy to put into your current job, affecting the way you’re viewed at work.
Work life balance?
Working huge hours every week will affect your personal life, so you need to weigh up whether it’s worth it. Perhaps a better solution might be to find another day job that pays better and stick with one job.
If you are looking at improving your income to achieve that little bit extra in the budget every month, speak to us today. We can help you review your personal circumstances and potentially identify ways you can reduce your tax, giving you more money without the need for that second job.