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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:
Zanatdy · 13/10/2023 08:38

You’re not unreasonable to resent it no. I earn 63k now. Only in the last year, I was under the 40% tax then. So any overtime, interest in savings (over £500) are all taxed 40%. I’m far from rolling in it living in the South East, I have a deposit saved for a flat from living in my ex’s house when he was working overseas for 3yrs, I saved what I’d have paid in rent. So that’s the extent of my savings. I can’t afford to buy a flat at the moment as I’d be paying half my income on mortgage. I am thinking of getting a second job as I have a child in Uni too and I want to save more for a property. It’s pretty depressing as people just think you’re loaded when you’re not. So I hear you

Didimum · 13/10/2023 08:37

gelatogina · 13/10/2023 08:14

Yes but lots of people don’t understand that anything over £1k is still taxed the same as their income. So anything over £1000 will still have 40% tax taken in her case. any salary from the company will still be taxed the same as it’s on top of her 50k. That’s why we get all these ‘oh limited company = tax dodgers’ posts from others.

Show quote history

I didn’t see the tax dodge posts!

Original poster
Powfred · 13/10/2023 08:35

cherrypeachparfait · 13/10/2023 08:20

You really can’t complain about tax and also want decent public services. Not saying you are but a lot of people seem to want others to pay for these things and not themselves

We don't have decent public services though. If I lived in Scandinavia with their childcare/ healthcare then I'd pay even higher taxes happily. Here I haven't had access to NHS care when I needed it, pay extortionate childcare then I'm given stick for wanting to keep a bit of side money that I wanted to earn to help my family

OP posts:
Redcargidan · 13/10/2023 08:34

Not Rtft but FYI, you pay tax on any earnings over your personal allowance, doesn't matter if its a "side hustle". So you should be paying tax on everything you earn given that you already earn over the personal allowance for your main job. Your tax is based on your collective earnings, not separate jobs.

Warum · 13/10/2023 08:34

Rosecoffeecup · 13/10/2023 08:21

Why is side hustle such an irritating phrase? Makes me cringe

I am with you on that.
I hate it.
A side business/small business is a much better term.
Even though it's probably evolved slightly, hustle always brings with it an element of slight dishonesty, by definition.
I hate lots of social media coined phrases though, influencer, side hustle and no doubt others.....

ActDottie · 13/10/2023 08:34

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 think the issue is that the NHS hasn’t had endless pots of money thrown at it for quite some time…

ActDottie · 13/10/2023 08:31

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.

So people who enjoy their jobs shouldn’t be taxed?

PosterBoy · 13/10/2023 08:30

Powfred · 13/10/2023 08:18

Base salary is 50k but I also earn commission and bonuses that take me to 60-65k usually. Obviously the tax man gets a large chunk of all of that too

Show quote history

So your initial post is misleading?

You actually earn £60-65k after pension contributions and are sad that you have to pay some tax on additional earnings from a different job?

Yanbu to be sad. We are all sad about paying tax. Yabu to think you are somehow special and should be exempt because you pay tax on something else already.

Get a lodger if you need tax free money

gelatogina · 13/10/2023 08:29

cakeorwine · 13/10/2023 08:17

She could set up as a limited company, have low earnings just pay corporation tax and take the rest as dividends.

No need to pay a salary

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Yes but you understand that she still pay 40% tax on any dividends over £1000? Plus the corporation tax?

ssd · 13/10/2023 08:28

Rosecoffeecup · 13/10/2023 08:21

Why is side hustle such an irritating phrase? Makes me cringe

Agree.

Its a side hustle when the poster is already earning decent money and fancies doing a bit of jewellery making or baking fancy cakes or something arty farty to bring in enough to pay the kids music lessons

Its a 2nd job when its someone on minimum wage cleaning in schools 6-9 before going onto their main job

MrsBennetsPoorNerves · 13/10/2023 08:26

cherrypeachparfait · 13/10/2023 08:20

You really can’t complain about tax and also want decent public services. Not saying you are but a lot of people seem to want others to pay for these things and not themselves

Actually, I think you can at the moment.

The tax burden in the UK is currently the highest that it has ever been, and yet our public services are on their knees.

I am absolutely in favour of paying more taxes into the system so that we can have excellent public services, and I'm perfectly happy to make my own fairly hefty contribution to that. However, I do expect the government to actually use my tax contributions to deliver public services effectively...not to piss them up the wall on pointless vanity projects and/or dodgy contracts that make their cronies richer without delivering any real benefits for the people.

ActDottie · 13/10/2023 08:24

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

In my job customers also pay VAT does that mean my income shouldn’t be taxed too?

ssd · 13/10/2023 08:24

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.

Yes by people like you trying to avoid paying tax.

ActDottie · 13/10/2023 08:22

if each income stream was taxed with a separate personal allowance and tax bands etc. everyone would be working ten jobs with various side hustles. It makes sense and is fair that they’ll tax you 40%… your income is considered as a whole.

TorroFerney · 13/10/2023 08:22

Powfred · 13/10/2023 07:46

Then overtime should be taxed differently too

Show quote history

Is this rule for everyone or just those who are doing it to make ends meet? How do they know who needs the money for basics and who is using it to say buy a new handbag/car or a luxury? Would those people pay the 40%?

cakeorwine · 13/10/2023 08:22

Powfred · 13/10/2023 08:18

Base salary is 50k but I also earn commission and bonuses that take me to 60-65k usually. Obviously the tax man gets a large chunk of all of that too

Show quote history

As has been pointed out, you earn a good salary and you have more income.

We are taxed on our income.

I can see that it does seem unfair that some income, such as when you rent a room, is not taxed as much - but income through jobs is taxed.

Rosecoffeecup · 13/10/2023 08:21

Why is side hustle such an irritating phrase? Makes me cringe

Stroopwaffels · 13/10/2023 08:20

NeunundneunzigHorseBallonz · 13/10/2023 07:54

Do you do your side hustle from home? You can claim some of your rent/mortgage/phone bills, etc

People always say this.

I have been working for myself from home for 20 years, way before the pandemic. It's a freelance sort of job, computer based, i'm not seeing customers at home, or buying/selling stock or anything like that. Insurance company in normal terms are not interested in that sort of business being run from home.

But if you go down the route of claiming a percentage of utility bills and mortgage etc you have to tell your mortgage lenders and insurance companies, and they may/will hike your premiums. This may be more than the savings. If you are turning over a large sum of money then yes it might be worth it, if you're not, and it's your main/only job it might not be. And paying an accountant - yes it's an option for your tac return, but again you have to balance the cost of hte accountant against how much tax you'd pay otherwise and how much they could save you.

cherrypeachparfait · 13/10/2023 08:20

You really can’t complain about tax and also want decent public services. Not saying you are but a lot of people seem to want others to pay for these things and not themselves

cakeorwine · 13/10/2023 08:20

cakeorwine · 13/10/2023 08:17

She could set up as a limited company, have low earnings just pay corporation tax and take the rest as dividends.

No need to pay a salary

Show quote history

Sorry - I forgot the Government keep changing the dividend allowance

Tax on dividends: How dividends are taxed - GOV.UK (www.gov.uk)

It was quite generous.

Now it isn't

Original poster
Powfred · 13/10/2023 08:18

PosterBoy · 13/10/2023 08:16

Why don't you qualify for CB?

Do you actually earn over £60k after pension deductions (so ...£65-70?) in your main job?

I can't believe you are crying over paying tax on your income tbh

Base salary is 50k but I also earn commission and bonuses that take me to 60-65k usually. Obviously the tax man gets a large chunk of all of that too

OP posts:
loislovesstewie · 13/10/2023 08:17

You pay tax on income; that's it. Sorry but I have no sympathy for you. I'm retired, I still pay tax as my income is more than the threshold. That is how tax works. And I never earned 50,000 quid a year, no where near it.

Myneighboursarewankers · 13/10/2023 08:17

TomatoSandwiches · 12/10/2023 22:50

Have you looked into matched betting?
You don't pay any taxes on income from this.

Or money laundering 🤷‍♀️

cakeorwine · 13/10/2023 08:17

gelatogina · 13/10/2023 08:14

Yes but lots of people don’t understand that anything over £1k is still taxed the same as their income. So anything over £1000 will still have 40% tax taken in her case. any salary from the company will still be taxed the same as it’s on top of her 50k. That’s why we get all these ‘oh limited company = tax dodgers’ posts from others.

Show quote history

She could set up as a limited company, have low earnings just pay corporation tax and take the rest as dividends.

No need to pay a salary

PosterBoy · 13/10/2023 08:16

Why don't you qualify for CB?

Do you actually earn over £60k after pension deductions (so ...£65-70?) in your main job?

I can't believe you are crying over paying tax on your income tbh

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