To resent paying so much tax on side hustle earnings?

So you think someone earning £25,000 in 1 job and £5000 in another job should pay less tax than someone earning £30,000 in just 1 job?

Why? That does not seem fair, does it?

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.

I used the Office of National Statistics for my research, but as you say, the sources vary wildly.

You'd think it would be a definitive calculation wouldn't you?

It would be fairer to either raise the tax threshold by £5k for everyone, or to tax income from people renting out rooms in the same way as everything else.

Why should someone who is working really hard in one single job be taxed more heavily than someone who has income from multiple different sources?

Yes, it might be that you have taken on a second job because your family needs more income, but someone else might have worked really hard/put in extra hours for a promotion in their main job for the same reasons. Why should you get a tax advantage that they don't?

The benefit of working hard is in the extra income that it generates. I don't see why having to pay tax on that income is a disincentive... surely we would all stop working as soon as we hit the tax-free threshold if that was the case?

Of course, once you get to a point where you no longer actually need the extra money, there will be a cost-benefit analysis as to whether the income that it generates is worth the extra effort. But that is quite a luxurious position to be in, so I think it's perfectly fair to pay tax at a reasonable rate.

it’s legal to use a spouse’s tax allowance it? i agree with pp’s suggestion of using your oh’s

I understand it completely. I own a limited company. I suggest it because OP’s side earnings are low enough to still take out the majority in dividends. Her partner/husband owning shares means he can also take out the same.

I do understand where you are coming from. I have several part time jobs and all my personal allowance is in one job. This means the other jobs are taxed across the whole salary. Its the same tax overall as having one job. But it really highlights how 'little' of each extra job you get to keep. I think its a reason people sometimes dont take on overtime as it you earn say £10.90 an hour and that particular 10.90 is taxed at 20% plus 12% NI plus 5% pension you keep £6.87 of it. Its not massively motivating.

What about someone who has 2 jobs? 2 different employments?
Should the second one pay no tax until it gets to £5000?

Apologies, I've not read ever post. I started a 'job' - my Mum not last week told me me it's a hobby - round looking after our children..... I now earn / get more money monthly than my husband who has had a professional job all his life.

The way I see it is I'm now in a privileged and happy position to be earning and now paying far more tax for something my Mum still thinks is a hobby / bit of fun - though I would argue is now a job as it takes up far more time than she realises.

I'm so lucky to be doing something I enjoy (99.9% of the time 😃). And yes, I started this job c 15 years ago to get extra money to pay for things for the children.

OP will be outraged to hear that once you’re over £50k of taxable income then child benefit gets recouped too. By £60k you get nothing. So for one kid CB is say £1,250, earn an extra £10k and you not only get 40% income tax but also lose another 12.5% by paying back CB. More if you have more than one DC.

This can be minimised (mainly by making pension contributions) but the 50-60k bracket is a really tax-expensive place to be. Get out the other side or wait for the higher rate bracket to be raised… if ever.

If you see an accountant, won't that wipe into your profits - so would the cost of an accountant be worth it ?
Even if the professional charge is taken from your gross profit

A profit of £1850 - well, it's earnings above the threshold so that's taxed.

As has been explained.

I know, I have a limited company. But she doesn’t earn that much from it, so it’s largely negligible. She could also gives her partner/husband shares to take out the same dividends.

I wish more people understood this and stopped thinking that limited companies allowed you to ‘avoid tax’ and withdraw dividends as you please…

YANBU OP and it p*sees me off that people with a bit of ‘drive’ are penalised so damn much.

First 1k of dividends is tax free. Rest, taxed as per income levels just no NI is paid.

Once your turnover (not profit) reaches 1k you have to fill in a tax return and oh tax on any profit.

If you pay yourself dividends the tax rate is 20pc as far as I understand iypt, or reinvest in the business so there's no profit to tax. I don't pay myself a salary it all goes back in the business to pay next month's expenses. Ltd company cost about 30.00 to set up and an afternoon of time including business bank account and registered office.

OP every successful multi billion business probably started as a “side hustle”. Are you saying they shouldn’t pay tax?

Take some proper advice from an accountant.

Consider if its worth paying more into a pension on your main job so you only have to pay 20% tax.

I can understand why anyone might 'resent' having to pay tax, but I don't understand why anyone with a basic income of £50K would expect to be able to earn more without that also been treated in the same way as any other taxable income at that amount.

But why should a side hustle pay less tax? What’s your reasoning apart from you want to pay less tax?