If you have several jobs in construction which are taxed through PAYE, you will also likely have more than one tax code, and this can make taxation matters confusing. You should get a tax code from each job that you work in, though your Personal Allowance – the amount that you can earn in a year tax-free – will usually only apply to your main job.
If you currently pay tax at a basic rate – i.e. just 20% of your income – then you’ll be given a ‘BR code’ for your second job in construction.
This means you’ll pay tax at the basic rate for all the work you complete in this job. This applies for higher rates of tax too, so if you pay 40% tax, you’ll be given a ‘D0 code’, which indicates that you’ll pay tax at that rate for all the work you perform in your second job.
Your Personal Allowance
If, in your first – or ‘primary’ – job you don’t earn enough money to exceed your Personal Allowance (which is £8,105 for the 2012-13 tax year) then you can use what’s left of it in your second job. This will stop you from paying too much tax, because as a worker in the UK, you are entitled to earn your Personal Allowance tax-free, no matter where it comes from. This applies to those who are employed in construction, as well as those who are self-employed within the industry.
If you like, you can also share your Personal Allowance across both – or all – of your jobs. While this doesn’t change the amount of tax that you pay in total, some workers may find it preferable. On the other hand, many will opt to pay tax on just one wage, for simplicity’s sake.
You can also check your tax codes to find out a little more about your income. The number in your tax code can be multiplied by ten to give you the total amount of money that you can earn in a year before you pay tax. If your tax code is ‘810L’, this means you can earn £8100 in a year before you have to pay tax. The letter – in this case an ‘L’ – signifies that the employee is entitled to basic Personal Allowance. This is the most common current tax code in the UK.
When you work two jobs, your second job may have a slightly different tax code however. Your tax code might have two letters and no number, or a letter ‘D’ followed by a number. This means that your Personal Allowance has been applied to the tax code for another job you hold, and so no Personal Allowance is taken into account for this job. Therefore, your second job is likely to be coded ‘BR’, which simply indicates that this income should be taxed at the basic rate.
A lot can be calculated by looking at your tax codes, and it will help you to understand more precisely where your tax and Personal Allowance come from between your two incomes. If you find that you aren’t being given all of your tax-free Personal Allowance, then it’s crucial to take steps to contact HMRC about your tax entitlement.