Second Jobs, Multiple Incomes and Career Changes: HMRC’s New Tax Guidance Explained
HMRC has published new guidance explaining how tax works for people with more than one source of income or whose circumstances change during the tax year, such as starting or leaving a job.
Although the guidance is aimed at individuals, it answers many of the questions payroll and HR teams regularly receive from employees with second jobs, pensions alongside employment, or additional income from self-employment or gig work.
The Core Principle: One Personal Allowance
The standard Personal Allowance for the 2026/27 tax year is £12,570. This is the amount most people can earn before paying Income Tax.
Every individual receives only one Personal Allowance per tax year, regardless of how many jobs, pensions or other income sources they have.
The allowance is split into equal weekly or monthly amounts and applied during each pay period.
How Tax Codes Work Across Multiple Incomes
HMRC assigns a tax code to each source of income so employers and pension providers can calculate the correct amount of tax to deduct.
In most cases:
- Your main job or highest source of income receives your Personal Allowance, typically using the tax code 1257L.
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Additional sources of income are usually taxed using different tax codes:
- BR – All income is taxed at the basic rate (20%).
- D0 – All income is taxed at the higher rate (40%).
- D1 – All income is taxed at the additional rate (45%).
- Different tax codes and rates may apply for employees who are resident in Scotland or Wales.
As a result, someone with two jobs will usually have one payslip showing a standard tax code, such as 1257L, while the second payslip may display BR or another code. Although this can appear concerning at first, it is often entirely normal.
When Tax Becomes Due
- On your main job, tax becomes payable once your earnings exceed the weekly or monthly Personal Allowance allocated to that pay period.
- On any additional employment or income source, tax is normally charged from the first pound earned because your Personal Allowance has already been used against your main source of income.
If your combined income across all jobs remains below the Personal Allowance, it may be possible to split your allowance between employments. HMRC recommends contacting them directly to discuss your individual circumstances rather than assuming this happens automatically.
Starting or Leaving a Job While Holding Other Income
HMRC’s guidance is particularly useful for HR and payroll teams dealing with everyday employee questions about career changes and multiple employments.
- If you start a new job while remaining employed elsewhere, you will not receive a P45 for the new role. Instead, you should complete a Starter Checklist and provide it to your new employer, declaring any existing employment or income so the correct tax code can be applied.
- If you leave a job, you can use your Personal Tax Account or the HMRC App to notify HMRC, helping ensure your remaining employment receives the correct tax code.
- These online services also allow you to check that all of your employments are listed correctly, see which job is using your Personal Allowance, and review HMRC’s estimate of your total income for the tax year.
At the end of each tax year, HMRC reconciles your total earnings and tax paid across all sources. Any underpayments or overpayments are then identified and corrected.
What This Means for Employers
Employers are not expected to provide personal tax advice, nor should they.
However, many employee queries about “incorrect” tax codes simply arise because they do not understand why a second job is taxed differently from their main employment.
Directing employees to HMRC’s Starter Checklist, Personal Tax Account and the latest guidance can often resolve these questions without payroll or HR teams needing to advise on an individual’s personal tax affairs.
Where Pecunia Pro Fits In
We process payroll for businesses with employees working under a wide range of arrangements, from single full-time roles to multiple part-time jobs and employment alongside pensions.
Ensuring tax codes are applied correctly, and clearly explaining why a second payslip may look different from the first, is something we handle every day.
Speak to Pecunia Pro
Getting employee questions about tax codes, second jobs or multiple sources of income?
Call us on 020 8143 1529 or email info@pecuniapro.co.uk, and we’ll help you explain it clearly or check that your tax codes have been applied correctly.