To resent paying so much tax on side hustle earnings?

Whoever invented PAYE was an evil genius.

You are the same person - yet

When you are paid net you don’t feel the pain
When you see the cash and hand it over you resent it

multiply that by all employed workers - and this is why we don’t rebel

^this - you need to incorporate.

@Flopsythebunny I am absolutely not wrong I am a chartered accountant and do tax returns for a living. If you have self employed income you can either deduct your actual costs or can decide just to deduct £1000 instead of actual costs. I

Maybe not less actual tax, but less deductions overall - you won't be liable for national insurance on the first £12k ish of profits, so about 12% less.

It used to be zero it was reviewed a few years ago and got put up to £1000

There are incentives for being entrepreneurial, usually in the form of small business start up help. But that is probably geared to people not still employed full time.
There is a lot of very useful information on HMRC website about what you can claim as expenses but be careful you don’t then fall foul of other rules, change of use of house etc.
You would need to include the tax you will be paying when pricing your product or service.
And a warning from someone who has been there, it is easy for something you love to become a chore when you need to make creative decisions based on economics!

Look into matched betting OP - I found out about it on mumsnet. Not taxable, not gambling and a few hundred a month is completely achievable. The welcome offers alone are worth around £700.
I use and love Oddsmonkey.

Agreed.

Yabu to see side hustle income as different, it's not and shouldn't be. Yanbu to be irritated at being in one of the numerous bottlenecks in our tax system, but as others have said you can likely deduct stuff.

I expect you walk on footpaths, that they are lit by streetlights, you drive on roads, have your rubbish bins emptied, your recycling taken away and dealt with, possibly a garden waste bin emptied, can benefit from the actions of emergency services like police, fire, ambulance. You realise your private healthcare staff have all been trained by the NHS, and that the NHS picks up the pieces when private healthcare goes wrong and you need intensive care unexpectedly? You would expect to benefit from the protection provided by the armed services, from missile interceptor systems if we were under attack. We have an education service, live in a system of democratic government- you benefit from that. If you attended private school- those staff were trained by our university and state school teacher training system.
You are entitled to free health care, free compulsory education for you and your children, will receive a state pension, benefits when you are in need of them.
You live in a country where, on the whole, law and order is maintained and an infrastructure is maintained.
Our cultural, environmental and architectural environment is often (but not all) maintained by government funding. Arts and sports receive millions in grants to subsidise them.

That's why you pay taxes.

Fair play ☺️, no it was another poster who made the little men comment. It’s not straightforward at all, nothing about tax is. Apologies I was probably overly harsh, I hear it a lot though so it’s not just you!

And how much would they charge!

YANBU OP - the bands are far too low. And it’s putting off people in public services such as NHS doing overtime work - what’s the point when they only receive 49.5% of what they would earn?

They have already reviewed things - you used to have to declare all self-employed income, but now you don't have to if it's less than £1000 - exactly to allow small fry side hustles. There has to be a cut-off somewhere. I guess the question is where a side-hustle turns into a second job.

OMG. I meant "a pension"!

Presumably OP doesn't want to contribute to "a pension", not to "a penis"!

You can only add money to your pension "via salary sacrifice" if your employer offers/allows that. But yes, it's the way to do it if you can.

Although OP is saying they need the money due to COL so presumably doesn't want to contribute the extra to a penis.

I’m here with my my arse well and truly whipped. I’ve been reading and digesting the replies to my post.( I’ve also been pairing socks)
Thank you for your second post to me Tenacious, where you explained how it works. I get it now. I don’t think I referred to him as one of the little men.

OP, if you want to avoid paying 40% tax on your "side hustle", the easiest way is to stop doing it, and not receive the 60% in income that you'd get after tax.

Well, why can’t they raise the tax-free amount to £17K for everyone?

I think your critical thinking skills and understanding of macro economics aren’t up to much. But yes, wouldn’t it be nice if we all got to keep more money AND we all had the same opportunities to earn AND there was no societal wealth inequality etc etc.

I made this point and the poster has mysteriously disappeared.

Are you absolutely kidding me?

He saved a ton and got much better treatment than people on half his salary - government topped up by 40% but he only pays 20% tax on it. Tiniest violin.

And yet he is whingeing?

I've looked into this, and with similar figures to you, OP. I've decided the easiest way to earn more is to get a promotion or another role, rather than risk spreading myself too thin for the sake of an extra £100 pcm after tax. I'd rather cut back on monthly costs instead.

The cost of an accountant will not be deductible if the OP also wants to use the £1,000 tax free trading allowance. It's one or the other.

Either you get the £1k allowance, but are assessed on your turnover with no deductions. Or you get to deduct all your expenses and only be taxed on the profits, but don't get the tax-free allowance.

The OP's individual circumstances will determine which works out best for her. If she has high expenses, it might be the latter.

The level of financial illiteracy on display in some of these replies is astonishing.

Can prople please stop recommending that the OP set up a limited company! Running a limited company comes with a load of costs and obligations, and there is no way that it will ever be financially worth it for the small amount of income the OP is talking about here. (And the company will be taxed on its profits too, so it's not the magic wheeze some seem to think.)

Her best bet is to work out whether she is best off being taxed on the profits (which she could deduct expenses from) or turnover (where she gets £1k tax free, but cannot deduct expenses) of her second income stream, and leaving it at that.

Just stick 5K extra in your workplace pension via Salary Sacrifice. You'll get 40% tax relief plus 2% NI on your salary sacrifice, equivalent to your side hustle income.
You can draw the money out tax free from your pension, using the 25% tax free allowance, as soon as you reach age 55.
I'm not a financial planner, you want to get proper advice, but there you go. All legal and above board.

To put it simply:

For every £10 a basic rate earner puts into their pension, the government has paid £2 by not taking the tax off it before you contributed. It’s an incentive to save and you then pay that incentive back at the same rate in retirement. You get the benefit of tax free growth on that £2 over time (less 20%).

For every £10 your DH put into a pension the government paid £4.50. Difference is that he will only ever have to pay back £2 of that if he’s taxed at 20%. So he pockets the extra £2.50 for every £10, because he is a higher earner.

Then multiply that up by the bigger rates of contribution that people can make from a higher salary and you start to see the problem.

Fair?

PS.. to the poster above, I’m not sure I’d describe 45% tax payers as the little men if that’s what you were referring to?

I think it's more that tax is not as black and white as you thought it was.

It's perfectly reasonable to question tax policy. It's quite another to create a new tax rule from a position of ignorance, as you have, and not to understand how your change might work in practice. Will it work? Is it fair? How do you define it? How does it work at the marginal levels?

Why should someone pay more tax on a salary of £52,000 than someone on a salary of £50,000 who earns £2,000 as a side income?

What about someone who earns £40,000 and earns £12,000 as a side income?

What about someone who has no salaried income but has 26 side hustles each earning them £2,000?

No, as a principle, it's not reasonable that different income streams should be taxed at different rates. (It would be far more reasonable, for example, if unearned income/wealth was taxed as highly as earned income.)