To resent paying so much tax on side hustle earnings?

Good on him. I applaud any win for the little man.

When the super rich, MPs, starbucks, Boots, Google etc are made to pay their fair share, I might change my mind. Until then, crack on to take any win you can, I say.

Please don’t tell me he actually thinks this too??

This is completely wrong!!! I cannot believe you’ve just said that.

He has MADE MONEY from the tax system!!

Pension contributions are made BEFORE tax, on UNTAXED income, so they’re free to tax or NI, from gross salary. They go in at your marginal rate, meaning that he got tax relief at 45%. The Uk pension system is EET… contributions are exempt, growth is exempt, income is taxed at the end.

He now pays 20% on pension income.. which means that he has saved 25% more (plus the tax free growth on the extra savings) on his income than someone who was a basic rate tax payer in their working life.

it’s actually one of the most grossly unfair things about the pension system!

(to make if fair there should only ever be 20% tax relief on pension contributions for everyone… meaning that he should have been paying 25% tax on his contributions to have the same outcome as a lower earner).

Unbelievable.

I would get yourself an accountant OP even if you aren't making a lot on the other business. The expense of an accountant is a tax deductible anyway, so comes out of your gross profit, and personally I find my accountant to be worth every penny. As well as taking the stress out of tax returns, they do highlight expenses that I wouldn't have even considered or thought of, such as a lot of my home based expenses that can be attributed to the daily running of the business.

My DH paid tax at 45% during his working lifetime, he paid into a pension to save for his retirement, he pays 20% tax on that now.

Do I think it’s fair, no I bloody well don’t but it is what it is. I don’t pay tax as my pension is below the tax threshold so I transferred some of my tax free allowance to him to reduce his tax burden. That only works if the lower earner doesn’t earn enough to pay tax.

Also, please don’t pretend to yourself that your are in some way being daring to question the tax system.

I’m sure Bernie Eccleston considered himself daring but look how that ended up.

Noting wrong with questioning the tax system- there are lots of ways it can be improved. But saying "I don't want to pay tax on money I earn" is not a credible starting point.

Hahahahahaa…. You mean YOU shouldn’t have to pay then?

But everyone else should.

Hilarious 😂

Thing is, imagine if everyone in the “low-middle income” bracket did that:

statistically low to middle = 50% of the working population

working population is around 32m, so that’s 16m people

paying for arguments sake 20% on £5k a year for their side hustle, that’s £1k

Totals £16bn a year

Remind me again why you shouldn’t have to pay it?

Boris Johnson has had "side hustles" in addition to his main employment as an MP. He earns hundreds of thousands from these. Should people like him not pay tax on that income?

Accountants fees are tax deductible and well worth it!

Yes, I bet lots of people would like the tax system completely rewritten to suit themselves.

But there's no reason for your second income to be taxed any less than your main income.

Of course you have to pay tax ffs!

Do you drive on roads? Have bins collected? You may have private medical care, but you will see doctors trained at the cost of the taxpayer. Same with dentists, perhaps ophthalmologists etc. You need to pay into the education system to have people literate and numerate enough to run shops, your bank, etc. Do you get your hair done? Take your car to be serviced? Get a taxi? Own things that had to be manufactured? Eat food? You understand that education is a vital function in society?

You depend on taxpayers. Everyone does.

You can resent it. But it's income. We pay tax on income.

This. We need to have better public services than what we currently pay for.

Although I don’t have kids it would make me a lot happier if my money was being used to make sure things like schools, youth club and libraries were better run /funded. As well as better health services etc.

I do think the bands are ridiculously low. Someone paying higher rate tax round here might now just be able to afford the mortgage repayment on a 1 bed flat with a crap lease. Pre pandemic that would have been a 2 bed semi. They'd still have struggled to save the deposit. Ive just got a pay rise and will be giving up my weekend work as it won't be worth it now at 40%. Shame, because my clients are keen for me to carry on. Still plugging away trying to save for a house that gets increasingly out of reach, not able to access dentists or doctors appointments etc. No chance of affording children and childcare. What is the point.

you aren’t going to get better ones by paying less tax!

I agree OP and it’s not really 40% tax (what about National Insurance etc which are just more income tax under another name to make it seem less than it is). Guess that’s why so many small business take cash in hand…

*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.*

It's worth getting some one-off advice from an accountant now if the side-hustle has the potential to grow. The Trading Allowance isn't straightforward, you don't apply it the same way to all side-hustles and it can be beneficial for tax not to claim it in some circumstances - because it looks at gross income and affects how you account for your costs.

OP, I think you can quite plainly deduce that you’re being very unreasonable from everyone’s responses. Stop being bitter that you have to pay tax, stop being bitter that you earn £50k and have reached the higher tax bracket. Your ‘ideas’ about tax breaks on second jobs, extra shifts and side hustles are desperate, ill-thought out tantrums on why you just want more money than you are owed.

No they won’t. At this level of income and legally, practically impossible.

I should add that the 55k is with the bonuses, he doesn't get them on top of 55k.

I'd agree OP that I don't think we receive good public services given the level of tax we pay. My main gripe I'd the childcare system and how expensive it is for 2 parents to go out and work. To have an under 2 in nursery near me is £80 a day.

DH earns 55k a year and I earn less as I'm self employed working around the kids. DH works his ass off to try and earn extra in bonuses but 40% of it is taxed so not much hits our bank account even if he puts extra hours in. Given the cost of living crisis, a 55k wage sounds like a lot, but it doesn't go as far as it would have 15 years ago by any means. I earn under the personal allowance but my accountant has told me we can't use marriage tax allowance to transfer some of his earnings over because of him being in the higher tax bracket, which is annoying.