When a new employee already works elsewhere, your payroll setup needs to record more than their salary and bank details. Their starter declaration, tax code, National Insurance treatment, student loans and pension assessment all need attention before the first payment.
The main risk is assuming their other employer has already dealt with everything. Each employer has its own responsibilities, and different deductions follow different rules. Collecting the right information early helps prevent incorrect payslips, unexpected deductions and avoidable corrections.
Confirm Whether the Other Job Is Continuing
Ask a clear question during onboarding: “Will you still be employed elsewhere when you start working for us?”
That distinction matters. Someone who left a previous job is in a different position from someone keeping that job while joining your business.
An employee continuing another job will not normally receive a P45 from that employer because the employment has not ended. Ask them to complete the current HMRC starter checklist where appropriate.
If they provide a P45 from a separate job they recently left, also establish whether another employment continues. Use HMRC’s starter process to determine the correct treatment rather than assuming the P45 describes their whole situation.
Even a small amount of pay can require PAYE reporting when the employee has another job. Do not leave occasional workers outside payroll simply because their earnings with you are low.
Capture the Details Needed for an Accurate Payroll Record
Your onboarding process should collect:
- Full name, date of birth and home address.
- National Insurance number, where available.
- The gender information required for HMRC payroll reporting.
- Employment start date and first payday.
- Agreed pay, normal hours, pay frequency and bank details.
- Relevant P45 information or a completed starter checklist.
- Student loan and postgraduate loan information.
Record the employee’s answers accurately and retain the supporting documents securely. If something is missing, flag it before payroll approval rather than filling the gap with a guess.
For an ordinary second job with an unrelated employer, you generally do not need to import that employer’s payslip figures into your payroll. Your system records the employment you operate, subject to any specific rules requiring earnings to be combined.
A consistent onboarding checklist also makes it easier to hand complete information to your payroll services provider before the processing deadline.
Apply the Correct Starter Declaration and Tax Code
Where an employee completes the starter checklist and confirms they have another job, Statement C applies. HMRC’s starting instruction for that declaration is tax code BR, which taxes the income from that employment at the basic rate without a tax-free allowance.
Do not copy the tax code from their continuing job. Applying the same allowance in both employments can leave the employee paying too little tax.
BR is a starting instruction, not proof that the employee’s eventual tax liability is correct. HMRC may issue a different code after considering their combined income and circumstances. This can include Scottish or Welsh coding where relevant.
Your payroll record should capture both the tax code and its calculation basis, including whether it operates cumulatively or on a week 1/month 1 basis. Apply subsequent HMRC notices according to their instructions.
If the employee believes their allowance should be allocated differently, they should ask HMRC to review it. Payroll should not redistribute allowances based on a verbal request.
Check National Insurance Separately from Income Tax
Paying National Insurance through another job does not automatically remove the requirement to pay it through yours.
For separate jobs with unrelated employers, National Insurance is normally calculated separately using the earnings from each employment. Select the correct National Insurance category for the employee’s circumstances.
However, additional checks are needed where the employee has multiple jobs with your business or works for another employer carrying on business in association with yours. Earnings may need to be combined for National Insurance purposes.
For example, two roles within connected businesses should not automatically be treated as completely independent simply because separate payroll records exist. Flag the connection before processing pay.
Some employees with multiple jobs can obtain permission to defer part of their employee National Insurance. Apply this only with the appropriate HMRC authorisation, and retain the evidence.
Record Student Loans Even If Another Employer Makes Deductions
Ask whether the employee has a student loan, a postgraduate loan, or both. Record the relevant plan and repayment status using their starter information and any HMRC notices.
Do not assume deductions belong exclusively to their main job. For ordinary separate employments, each employer calculates repayments using the earnings it pays and the applicable repayment threshold.
This means deductions may arise in both jobs, one job, or neither through payroll, depending on earnings and the loan involved.
Where earnings must be aggregated, check the corresponding loan deduction rules before processing.
Make sure your payroll software supports the current plans, including Plan 5. If the employee cannot identify their plan, follow current HMRC instructions rather than selecting one from memory. Also keep postgraduate loan information separate because both types of deduction can apply together.
Assess Workplace Pension Duties for Your Employment
An employee’s membership of another workplace pension does not remove your automatic enrolment duties.
Assess them using their age, earnings from your employment and the other eligibility conditions. Do not combine pay from unrelated employers to decide whether your own automatic enrolment threshold is met.
Record the assessment outcome, relevant dates, pensionable earnings basis and contribution settings. Where postponement is used, keep the required notices and reassessment date.
Do not exclude someone because they say they already contribute elsewhere. Any decision to opt out must follow the proper process after enrolment. Employees who do not qualify for automatic enrolment may still have rights to opt in or join.
Connect Hours Records with Working Time Checks
Payroll needs accurate hours for pay calculations, while your employment records should capture enough information about the other job to check combined working time.
For most adult workers, the average weekly limit normally applies across their jobs together. A voluntary written opt-out may be available, but it does not remove every working time protection.
Ask employees to report changes to their other working hours. Keep this information accessible to the person approving shifts and overtime, rather than leaving it solely in an onboarding folder.
Review the First Submission and Later Changes
Before the first payday, check that the payroll record matches the starter documents, deductions and pension assessment. Send the Full Payment Submission to HMRC on or before payday, unless a permitted exception applies.
Assign someone to review incoming tax code and loan notices before each payroll run. If the employee later leaves their other job, record the change and follow the appropriate HMRC process rather than automatically switching their tax code.
Frequently Asked Questions
1. Does a second job always mean a higher tax rate?
No. The final tax position depends on total taxable income and individual circumstances. The initial payroll code does not necessarily settle the annual liability.
2. Can someone start without a P45?
Yes. Use the starter checklist where required. An employee keeping their existing job would not normally receive a P45 from that employer.
3. Must we obtain payslips from their other employer?
Usually not for unrelated employments. Additional information may be necessary where earnings must be aggregated or a specific payroll issue needs resolving.
4. Can we stop loan deductions because another employer deducts them?
No. Follow the rules and HMRC notices applying to your payroll. Deductions elsewhere do not automatically cancel your responsibility.
5. What if the starter declaration is missing?
Follow HMRC’s missing-information procedure. Where the checklist cannot be completed, HMRC directs employers to use starter declaration C and tax code 0T.
Build a Setup That Stays Accurate
A reliable second-job payroll setup starts with clear employment information and treats tax, National Insurance, loans and pensions separately. It also needs a process for handling changes after onboarding.
As hours, earnings and other employment change, review the relevant records and apply official notices promptly. Interface Accountants’ payroll administration services include payroll processing, payslips, RTI submissions and auto-enrolment support, helping businesses keep those responsibilities organised.