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AIBU?

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Original poster

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:
BMW6 · 12/10/2023 23:45

FFS that didn't take long for you to cop on!

But why is it pointless to earn another 60% of an income on top of your main income?

I could understand if tax was 100% on the "side hustle", but if 60% is not enough maybe you're just rather unreasonable

CagneyAndLazy · 12/10/2023 23:44

AlwaysPrettyOnTheInside · 12/10/2023 23:40

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

Show quote history

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.

YireosDodeAver · 12/10/2023 23:44

If your earnings are close to £50k it's very easy to just pay a bit extra into your pension to stay under the limit. If you don't want to do that, check out what tax-efficient purchasing schemes your employer will facilitate - you can buy a new bike, car or computer via an appropriate salary sacrifice system and are back under the threshold.

Original poster
Powfred · 12/10/2023 23:41

BMW6 · 12/10/2023 23:38

Well how on earth would you distinguish a "hobby" from a "side hustle" then OP!?

Or from any other earnings?

Without opening a Pandoras Box where pretty much no-one has to pay any Income Tax at all?

Think about it.

Edited

Yes it would be too complex to set up such a system that takes all this into account. Am aware of that. Plus it would be abused too. So we're stuck with current tax system where it's pointless trying to earn more or monetise hobbies once you hit higher tax rate

OP posts:
AlwaysPrettyOnTheInside · 12/10/2023 23:40

CagneyAndLazy · 12/10/2023 23:24

I just wouldn't declare it unless absolutely unavoidable.

Hopefully you don't expect to benefit from any taxpayer funded services, either.

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

CagneyAndLazy · 12/10/2023 23:39

@Powfred

I will vote Labour even though they'll probably make me pay more tax as they think people like me are rolling in it in the higher tax bracket.

The Tories love you to think that.

BMW6 · 12/10/2023 23:38

Well how on earth would you distinguish a "hobby" from a "side hustle" then OP!?

Or from any other earnings?

Without opening a Pandoras Box where pretty much no-one has to pay any Income Tax at all?

Think about it.

Labraradabrador · 12/10/2023 23:37

i disagree that it is somehow different because it is a ‘side hustle’, but completely agree that disproportionately penalising extra work is not good for the economy or the exchequer. I work freelance, and beyond a certain point (£50k ish + pension contributions) it is like why bother. I don’t even work full time, so from a broader economic perspective it is a missed opportunity.

PickAChew · 12/10/2023 23:35

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

Show quote history

Anybody who has any job needs the money.

Original poster
Powfred · 12/10/2023 23:33

BMW6 · 12/10/2023 23:31

It's INCOME Tax OP. A tax on INCOME.

Your "reward" is that you get to keep at least 60% of the income from your hobby/"side hustle"/business

What makes you any more special than someone who has a full time job, but has to take an evening job to make ends meet and pays up to 40% tax on their part time job?

You've not read my posts properly. I've said any second (evening or weekend) job should also get taxed more fairly. Don't think I'm special at all - trying to highlight how tax system is quite one size fits all and should take into account hobbies and extra jobs as ways to make extra cash in cost of living crisis

OP posts:
TruckDiver · 12/10/2023 23:32

Yes I think it is the fact its a fun hobby rather than 'work' that makes me resent the tax bit perhaps. It's like taxing my fun/ leisure time as I enjoy doing it.

Oh well there's your answer then. Do it for free rather than charging for it. Have all the fun and don't have to pay any tax.

I also feel like there should be some sort of fiscal reward when you're taking initiative and trying to generate a bit of extra income in this way but I suppose it would be impossible to design such a system and it would be abused

Hang on... what do you mean "Trying to generate a bit of extra income"? I thought you said you were just doing it as a fun hobby?

TinySaltLick · 12/10/2023 23:32

Powfred · 12/10/2023 23:31

I will vote Labour even though they'll probably make me pay more tax as they think people like me are rolling in it in the higher tax bracket.

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Well you are more rolling in it than people in the lower tax brackets

TinySaltLick · 12/10/2023 23:31

AlwaysPrettyOnTheInside · 12/10/2023 23:19

I just wouldn't declare it unless absolutely unavoidable. And then limited company it and claim every expense possible.

The government can keep it's fat greedy fingers out of my pockets thanks.

Can you please keep your fat greedy fingers out of my bin collections and off my roads plz

Original poster
Powfred · 12/10/2023 23:31

TinySaltLick · 12/10/2023 23:29

I understand the frustration at the underfunding of the NHS, but depriving it of revenue isn't going to fix it - voting and canvassing for a party to run it more efficiently /fund it properly would

Show quote history

I will vote Labour even though they'll probably make me pay more tax as they think people like me are rolling in it in the higher tax bracket.

OP posts:
MrsSkylerWhite · 12/10/2023 23:31

Yes, YABU.

BMW6 · 12/10/2023 23:31

It's INCOME Tax OP. A tax on INCOME.

Your "reward" is that you get to keep at least 60% of the income from your hobby/"side hustle"/business

What makes you any more special than someone who has a full time job, but has to take an evening job to make ends meet and pays up to 40% tax on their part time job?

bonzaitree · 12/10/2023 23:30

But basically if you are a higher rate taxpayer, you’re only ever going to get 60% of what you earn, whether that’s pay rises, promotions, overtime or side hustles.

You have to think very carefully about whether the extra work is actually worth it!!

Ineedaholidaynowplease · 12/10/2023 23:30

OK OP. I'll take on a 16 hour work contract and then do 20 hours a week overtime 😁....you really haven't thought this through.

Original poster
Powfred · 12/10/2023 23:29

bonzaitree · 12/10/2023 23:26

You’re right.

£1,000 isn’t high enough to get tax free.

Perhaps this should be reviewed and raised to what? £3,000? £5,000?

£1000 doesn’t go anywhere near as far as it used to.

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Yes exactly.

People can earn up to around £5k tax free when renting a room out in their home I think. Why can't hobbies have same threshold?

OP posts:
TinySaltLick · 12/10/2023 23:29

Powfred · 12/10/2023 23:23

Yes but the NHS is badly run and just has endless pots of money thrown at it by inept governments so I resent paying extra tax when it's not used efficiently. I've had to fork out for private appointments several times as the NHS wouldn't help me after two miscarriages - private gynaecologist found a small issue and sorted it. It was a lot of money for me to go private but I had no choice

Show quote history

I understand the frustration at the underfunding of the NHS, but depriving it of revenue isn't going to fix it - voting and canvassing for a party to run it more efficiently /fund it properly would

Original poster
Powfred · 12/10/2023 23:28

Mumof2teens79 · 12/10/2023 23:25

OK so do it for fun and not for profit, charge costs only

But sorry, why is your fun initiative to generate income somehow more worthy of reward and tax breaks than;
Someone working overtime
Someone with a weekend cleaning job
Someone who lives on the same salary as your main income but gives up time for free to volunteer at a charity?

Show quote history

I think overtime, weekend jobs, any kind of side gig should be treated differently in tax system to help people out. If I was a politician I'd try and come up with good policy on this.

OP posts:
Ineedaholidaynowplease · 12/10/2023 23:27

You do get an initiative....you get to earn 1k tax free on your side hustle before they charge you tax. May not be much of one but nonetheless you pay less tax on your side hustle than if you earned 1k extra in your main job.

PP has basically summed up why your logic is flawed. If side hustles weren't taxed at the same rate, we'd all be working part time and earning 12.5k in our main jobs and having 40k side hustles.

bonzaitree · 12/10/2023 23:26

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

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You’re right.

£1,000 isn’t high enough to get tax free.

Perhaps this should be reviewed and raised to what? £3,000? £5,000?

£1000 doesn’t go anywhere near as far as it used to.

TinySaltLick · 12/10/2023 23:26

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

Show quote history

But then everyone would be incentivised to split their job into ten little businesses to avoid tax, which would be unproductive.

It is income tax - tax you pay on your overall income.

Mumof2teens79 · 12/10/2023 23:25

Powfred · 12/10/2023 23:19

Yes I think it is the fact its a fun hobby rather than 'work' that makes me resent the tax bit perhaps. It's like taxing my fun/ leisure time as I enjoy doing it.

I also feel like there should be some sort of fiscal reward when you're taking initiative and trying to generate a bit of extra income in this way but I suppose it would be impossible to design such a system and it would be abused.

OK so do it for fun and not for profit, charge costs only

But sorry, why is your fun initiative to generate income somehow more worthy of reward and tax breaks than;
Someone working overtime
Someone with a weekend cleaning job
Someone who lives on the same salary as your main income but gives up time for free to volunteer at a charity?