We all make mistakes and unless you’re in the tax trade it can be especially true for your self-assessment tax return. Earlier Year Corrections (EYC) are a way to correct any errors from previous years on your self-assessment tax returns. They can be used to adjust errors in your income, expenses or any other information you reported to HMRC via your tax return.

When can I use EYCs?

EYCs can be used to correct any errors on your self-assessment tax returns as long as the year of correction is still open for HMRC to investigate. This means you can use EYCs for any errors in your current tax year, and for previous tax years.

How do I use EYCs?

To use EYCs, complete a form called Earlier Year Correction Notice, which can be found on HMRC’s website. This form will ask for information about the error you want to correct. You’ll also need to provide evidence that supports your EYC claim. 

When completed, submit the form and the evidence to HMRC who’ll investigate your claim. If they agree you’ve made an error, they’ll make the necessary adjustment to your tax return and either send you a refund or a bill, whichever applies, preferably the former of course.

Whilst having a second job is a great way to earn some extra income, it’s important that you’re aware of the tax implications. In the UK, you’re taxed on the total amount of your income earned from all sources. So, if your total income from all your jobs exceeds your personal allowance, you’ll be paying tax on your second job income as well as your principal income.

The amount of income tax you have to pay depends on which tax band your total income falls into. Currently, an individual’s personal allowance – the money you can earn before you have to start paying tax – is £12,570 for the 20232/24 tax year. You will pay tax on all your earnings above this allowance threshold at the following rates:

• Basic rate: 20% on earnings between £12,571 and £50,270.
• Higher rate: 40% on earnings between £50,271 and £150,000.
• Additional rate: 45% on earnings above £150,000.

Source: https://www.gov.uk/income-tax-rates

You may have to pay National Insurance (NI) contributions on your second job earnings, which is currently at a rate of 13.8%. If you’re self-employed, don’t forget it’s your responsibility to ensure you pay your NI contributions to HMRC. The Class 4 NI rate for the self-employed is 9% on profits between £12,570 and £50,270 and 2% on profits over £50,270.

However, for a second job, make sure you’re paying the right amount of income tax and NI contributions as they may be different from the rates you pay on your primary job income. HMRC’s website has all the relevant details about the tax implications regarding second job earnings.

Salary

This is the biggest cost that comes with having employees and of course, the salary you pay each employee depends on their skills, experience and what they’ll be doing for your business. 

National Insurance contributions

As well as employee salaries, employers in the UK also pay employee National Insurance (NI) contributions. NI is a tax that is used to fund the National Health Service (NHS), State Pensions, Jobseekers Allowance, Maternity Allowance and a whole host of other benefits. 

The level of Class 1 NI contributions paid by the employer depends on the employee’s earnings. The rates for most people for the tax year 2023 to 2024 are 12% for those earning £1,048 to £4,189 a month for example. Employees will pay less if they’re married, a widow, have a valid ‘certificate of election’ or are deferring National Insurance because they’ve got more than one job.

Benefits

On top of salaries and NI contributions, UK employers may also give employees certain benefits to help attract and retain staff, like health insurance, pension contributions, paid leave, gym memberships and other reward schemes. 

Taxes and business costs to an employer

On top of the cost of salaries, National Insurance contributions and employee benefits, employees will also be subject to income tax.