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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

To resent paying so much tax on side hustle earnings?

311 replies

Powfred · 12/10/2023 22:41

I earn around 50k in my main job and pay all the relevant taxes through paye etc.

A few years ago I had a decent disposable income but with childcare, mortgage rises fuel etc it has gone down a lot. I do have a DP who shares these costs but they earn less and have also felt squeezed financially.

At the start of the year I began a side hustle as a hobby to generate some extra income. I figured if it did well I'd have some extra money for treats and days out etc. Not going to give details of side hustle in case outing.

Side hustle is gaining momentum and could potentially generate a few hundred a month soon. However, I've read that once you earn more than £1,000 per year from a hobby/ side hustle, you then have to declare and register earnings for tax. Given my main job salary, this would mean anything I earn from side hustle would be in a high tax bracket.

So (if I've understood correctly - happy to be corrected if not), if it does well then I'll have to pay 40% of what I earn from it in tax.

AIBU to resent this? I've tried to be entrepreneurial to generate more cash when main jobs aren't giving us as much disposable income as before but it just seems pointless if half of the income just goes to taxman.

OP posts:
Commonhousewitch · 13/10/2023 02:12

You either agree that people earning more should be taxed more (called progressive taxation) or you don't- it doesn't matter where you get the income from. I strongly support progressive taxation- it is the fairest way of funding the things that we need as a society. I honestly don't see why you think the money you earn on the side should be different - if i get rental income should that not be taxed?
And i loath the term side hustle.

NoSquirrels · 13/10/2023 01:41

EmmKay13 · 13/10/2023 01:33

I agree with you. At a few times in my life I've had to get another job on top of full time job. 90% of those times I wasn't a higher tax payer, but was taxed heavily on second job.

In Covid times, my fixed term contract ended. I managed to get a job in my field, but for a lot less than my previous salary. So I took on a second job again, the amount of tax was insane.

I'm obviously not against paying taxes and NI, but think a earnings from second job / side hustle should be combined with earnings from main job and there be a earnings cut off before addition tax, rather than 2nd job taxed higher no matter your usual earnings.

think a earnings from second job / side hustle should be combined with earnings from main job and there be a earnings cut off before addition tax, rather than 2nd job taxed higher no matter your usual earnings.

What do you mean by this? A second job isn’t taxed higher - I think you’ve misunderstood. The system works exactly how you want it to - all your earnings are added up, your regular £12K tax free allowance dedicated, then you’re taxed on what you earn over £12K. It’s just that on the second job payslip (if you’re PAYE) the first job has already claimed your £12K tax free allowance so it appears like a higher rate of tax - but it’s not. You’re taxed on overall income.

NotReadyForAutumnYet · 13/10/2023 01:39

I think some side hustles may take a fair bit of time. Someone may not mind spending quite a lot of extra time than they would have done on a hobby to make it 'sellable', happy to make a small amount per hour. When this is then taxed, their hourly rate may be absolutely pitiful.

EmmKay13 · 13/10/2023 01:33

I agree with you. At a few times in my life I've had to get another job on top of full time job. 90% of those times I wasn't a higher tax payer, but was taxed heavily on second job.

In Covid times, my fixed term contract ended. I managed to get a job in my field, but for a lot less than my previous salary. So I took on a second job again, the amount of tax was insane.

I'm obviously not against paying taxes and NI, but think a earnings from second job / side hustle should be combined with earnings from main job and there be a earnings cut off before addition tax, rather than 2nd job taxed higher no matter your usual earnings.

Angelou79 · 13/10/2023 01:26

why do you think you’re special & don’t need to pay tax when you earn way over national average? Cost of living has hit everyone doesn’t mean they commit fraud!

LuluBlakey1 · 13/10/2023 01:19

I paint - cards and pictures. I have been asked several times recently if I would sell things. A friend offered to buy a set of 6 cards for £3 each. I just gave her them (there were lots in a box I'd put them in). Then her SIL asked if I would do her a set and she'd pay me £4 a card. I said I wasn't interested but it got me thinking.

I wouldn't be earning anything at all from it. It would take about 3 hours to paint each set - then there's the cost of paints, cards, envelopes, then time. But I paint them anyway- just like doing it and I send them on birthdays etc. A couple of friends have asked about buying paintings. I've just said I don't sell them or do commissions- but perhaps I could: I have a 'studio' full of them. It has got me wondering.

So have I understood this correctly, if (after materials), I earn less than £1000 a year, I don't have to pay tax on it?

ilovesooty · 13/10/2023 01:18

Distinguishedandmature · 13/10/2023 01:02

Could you work cash in hand?

Another suggestion of tax evasion.

DPotter · 13/10/2023 01:08

I feel your annoyance but there has to be a limit somewhere and for right or wrong it's £1000.

As others have said you can claim tax deductions for all sorts of things - the HMRC website itself is very helpful on this. I've had a couple of poor years and have manage to legitimately reduce my tax bill substantially. I'm a sole trader so haven't had to bother with company registration. You don't need to register for VAT until you earn in excess of £85k.

Distinguishedandmature · 13/10/2023 01:02

Could you work cash in hand?

Princessfluffy · 13/10/2023 00:54

The £1,000 disregard relates to TURNOVER and not to profit OP.

If your sales total over £1,000 per year then you must declare it all on your tax return.

FlamingoFloss · 13/10/2023 00:48

Totally get where you’re coming from. You’re already busting your arse arse doing a full time day job which you part pay at the higher tax rate.
I think worth looking at an accountant who could probably write off alot if that tax

Bluegreenseasoffoam · 13/10/2023 00:42

Powfred · 12/10/2023 22:45

I don't resent taxes in main job. I've paid taxes all my life but if it's a side gig or hobby to earn some extra cash then why should that be taxed to the max as well? Side hustle already involves paying VAT

You are only being unreasonable if you don’t feel the same resentment on behalf of every small business.

StinkyWizzleteets · 13/10/2023 00:38

If your “side hussle” brings in £20k would you still expect to pay less tax cos you enjoyed it more than your primary job?

Do you think someone working three part time jobs to make a full time income of say £25-30k should pay less tax on two of the jobs because they already have one or is this lower tax idea only for higher earners on more comfortable wages?

Its the system we agree to work in and just because your hobby earns you money doesn’t make it less of an income generator than working in a cafe a few hours a week on top of your regular job.

It’s part of the social contract. We agree to pay the relevant taxes for access to health, education, care and defence among other things.

ThinWomansBrain · 13/10/2023 00:38

why should earned income not be taxed, or taxed a lower rate because it comes from a different source?
Compared to an additional £6k increase in income from your salaried role, you won't be paying NI on it, and if your repaying a student loan, you won't get deductions for that either.

Woollyguru · 13/10/2023 00:34

I agree OP. I'm on the £50k border and was thinking about a side hustle but it's just not worth the bother to only keep 60% of what I'd make. £50k threshold would be £65 if it had kept up with inflation. We pay far too much tax which is then wasted and pilfered by our crooked corrupt government.

Tinkerbyebye · 13/10/2023 00:31

It’s income regardless of how you get it

so cough up or don’t do it or take a chance and hope you don’t get caught and fined but stop whinging

ilovesooty · 13/10/2023 00:28

chachachachangesoolala · 13/10/2023 00:04

Of course you're being unreasonable. Income is income, whether it's from one, two or four different jobs. You don't get to pay less tax because you get it in several different chunks!

Exactly. When I was self employed in addition to my PAYE job that's exactly how it worked. I don't see any justification for expecting to pay less tax on a second income.

The suggestions above that she should find ways to not declare it are pretty disgusting as well. I bet posters suggesting tax avoidance or even tax evasion are very scathing about those they perceive as benefit scroungers.

ElleDeeCB · 13/10/2023 00:16

I have decided against taking on extra work recently because it would have been taxed at the higher rate (and I felt it wasn’t worth it). And then I realised that if we had a government that used tax money effectively, weren’t such a bunch of scammers trying to find ways to help wealthy people evade paying, and all our taxes went towards building public services we could be proud of rather than cutting things to the bone and outsourcing to private companies (and their shareholders)…. I’d have a total mind shift and want to do the extra work. Because I’d want to contribute to a fairer country we could proud of. I would want to work hard and feel the satisfaction that my extra taxes were going towards helping everyone. That we had such good public healthcare and schools that no one would feel the need to pay private companies for these, and that public transport was so efficient and affordable most people would prefer that than the hassle of taking their own car.

it’s been a long day and maybe I’m overtired and losing the plot, but maybe it’s not paying taxes that’s the problem, but instead its the government.

chachachachangesoolala · 13/10/2023 00:04

Of course you're being unreasonable. Income is income, whether it's from one, two or four different jobs. You don't get to pay less tax because you get it in several different chunks!

Iloveshoes123 · 13/10/2023 00:02

Powfred · 12/10/2023 22:56

I think side hustles or small time second jobs should have a lower rate of tax. Anyone who takes a second job or does a side hustle probably needs the money

This has to be a wind up. I can't take a second job because I work 60-70 hours in my current job but you should get part of your income tax free cos you really need the money!
Maybe we should all be able to opt into the 'I really need the money' tax free amounts🙄. I could certainly do with paying a lot less tax.

Iloveshoes123 · 12/10/2023 23:59

I don't particularly like paying tax but I have to pay it on all earnings - not sure why it should be any different for you!

GarlicGrace · 12/10/2023 23:51

AlwaysPrettyOnTheInside · 12/10/2023 23:40

I don't. I receive nothing. I have private healthcare too.

Do you live in one of the countries that has low/no tax and few/no public services?

If not, you don't "receive nothing". The NHS trains the medical staff of your private health facilities and will perform the heavy-duty services you need if a surgery goes wrong or you suffer an emergency. You rely on the existence of a police service and fire service. You drive on roads maintained at public expense. You expect to be able to walk around without catching gruesome diseases, being confronted by the terminally unwell and untreated injured, or getting swarmed by beggars. You never have to pass fetid open sewers, you don't encounter rats everywhere you go and the streets you use are not piled with rotting filth. Robbery is not a daily feature in your life.

If you think I'm exaggerating, it's time you paid some visits to "less developed" countries and applied your thinking brain.

DrJump · 12/10/2023 23:51

Powfred · 12/10/2023 22:54

No issue with main job income tax but surely small fry side hustles could be reviewed? I bet lots of people do similar to help get more money. We're in a cost of living crisis, system should be more flexible

How can the response to a cost of living crisis be that a family needs more than two working adults to survive. If anything during a cost of living crisis we need more tax on higher earners to stop the divides widening.

Mouseplant · 12/10/2023 23:49

Yabu to use the term side hustle

An awful term that glosses over people having to take a second job or start a small business to make ends meet.

AlwaysPrettyOnTheInside · 12/10/2023 23:46

CagneyAndLazy · 12/10/2023 23:44

We have private health, used private schooling, and live at least 3 months of the year outside of the UK.

We still declare every penny of income for UK income tax and appreciate the services it goes to provide (no matter how the Tories have decimated them).

If everyone thought like you there'd be no services for those who need them.

There are no services anyway, so I'll keep the money I earn, thanks.