Active discussions

Please or to access all these features

Talk
AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

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:
Sunshineandchill · 13/10/2023 07:57

If a certain people would pay their taxes, instead of putting them in offshore accounts, just think of the difference that would make!!

MammaTo · 13/10/2023 07:56

In all honesty if the side job was cash in hand and it’s not your main source of income then I wouldn’t declare it. If you work full time and pay tax via PAYE as you say then that’s your contribution.

MrsBennetsPoorNerves · 13/10/2023 07:56

AlwaysPrettyOnTheInside · 13/10/2023 07:50

Bins are paid for once a year. There are large bins dotted around. You take your rubbish to those yourself. There is no doorstep collection. There are also no dirty streets or litter.

If you don't have private cover and use that, or you arent paying into the system, if you call out emergency services you get billed after.

Road use is paid for in vehicle tax.

Show quote history

It sounds like you are outside of the UK?

If you live in a country without public services at all, then that's a different set up. Not one that I would ever choose, as I've seen how disastrous that can be for the people at the bottom of the pile, but I'm glad it works for you.

Original poster
Powfred · 13/10/2023 07:55

Savoury · 13/10/2023 07:43

The rate of productivity in the UK is lower than any other G7 economy because it doesn’t pay to be efficient, to innovate, to take risks, to work more..

Exactly!

OP posts:
Starlightstarbright2 · 13/10/2023 07:54

there are many multi million organisations that pay no tax .. I would rather they were targeted..

however there are many people doing food deliveries, extra jobs just to put food on the table ..

its too simplistic … I worked an extra 30 minutes last week but I only work 32 a week .. where do the hours become overtime?

Aprilx · 13/10/2023 07:54

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

It doesn’t matter whether it is a “side hustle” or whether you (general you) simply get a higher paying job, when earning go over a certain level, you pay 40% tax.

And if you are registered for VAT then it is surprising you are not already over £1000 per year profit. You must be going something with very high turnover and costs? Also your business is not paying VAT, if you are registered for VAT, your customers are paying it and you are merely collecting it and handing it over.

Original poster
Powfred · 13/10/2023 07:54

Beautiful3 · 13/10/2023 07:36

Stop when you get to £ 1,000.

Yes I think I'll just have to stop building it up and keep it very small. Nothing like a bit of heavy taxing to clip your business/ creative wings!

OP posts:
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

Original poster
Powfred · 13/10/2023 07:52

tpxqi · 13/10/2023 07:15

You are not wrong OP. Most people on here are economically illiterate and will give you a hard time without understanding that higher taxes actually prevent people for working or creating more. As you have already stated.

Yes I knew I'd get flack as I'm in 40 % bracket so people assume you have lots of money and how dare you complain about tax. Maybe if we had better government and public services I'd feel better about the whole thing

OP posts:
Zonder · 13/10/2023 07:51

Powfred · 13/10/2023 07:46

Then overtime should be taxed differently too

Show quote history

Alternatively we could have a fair living wage for all and not screw up our economy. Something has made it all much worse over the last 13 years 🤔

Flopsythebunny · 13/10/2023 07:51

Bdhegdjeob · 13/10/2023 06:45

Deduct any expenses and pay yourself an annual dividend (that attracts a lower rate of tax).

To do that she would have to set up a limited company. That comes with a while load of hassle and legal obligations

AlwaysPrettyOnTheInside · 13/10/2023 07:50

MrsBennetsPoorNerves · 13/10/2023 06:47

That's incredible, well done you.

Can you explain a bit more how you cover everything privately?

How do private emergency services work, is that a subscription service that sends private fire/police/ambulance services etc if you need them?

How do you get around if you don't use the road networks?

Do you subscribe to a private rubbish collection service?

Please do tell us more about how you manage to live without taking anything from the state.

Show quote history

Bins are paid for once a year. There are large bins dotted around. You take your rubbish to those yourself. There is no doorstep collection. There are also no dirty streets or litter.

If you don't have private cover and use that, or you arent paying into the system, if you call out emergency services you get billed after.

Road use is paid for in vehicle tax.

Doggymummar · 13/10/2023 07:50

My side hustle had grown to the point it is likely to exceed £1000 this year, last year it didn't. I now have a limited company and accountant and I am unlikely to need to pay any tax at all as expenses, such as marketing, travel, subsistence, rent of a room in my house to do business professional subscriptions insurance etc all fixed costs are several thousands. I expect to break even next year and hopefully be in profit from year 5. My advice, get an accountant quick.

MiddleParking · 13/10/2023 07:50

Powfred · 13/10/2023 07:46

Then overtime should be taxed differently too

Show quote history

Right, and any thoughts on what behavioural change that might drive from employers and workers, and what the wider implications of that would be?

Yants · 13/10/2023 07:49

ittakes2 · 13/10/2023 06:53

OP my cleaner's husband earns £26k a year and they have three kids one with special needs and they live in a 2 bedroom flat in the south east. She earns £5k from cleaning - you really aren't as poorly off as you think you are.
There are lots of people trying to make extra money at the moment.

How much do they receive in additional benefits?
Why did they choose to have 3 children when they have such a low income?

Didimum · 13/10/2023 07:49

You’re being very unreasonable.

Create a limited company and put all your side hustle earnings in there. You’ll only pay basic tax and can take out dividends.

AgnesX · 13/10/2023 07:48

Side hustle? Please, it's a second job. Like any job you pay tax on your earnings.

slashlover · 13/10/2023 07:48

Powfred · 12/10/2023 23:28

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.

Show quote history

I work part time, 16 hours, but will often cover holidays etc. and work full time for those weeks.

Are you saying that I should earn more for working 39 hours those weeks than someone who is contracted for full time hours?

We have staff contracted for 10 hours, I would not be happy if they earned more than me for working the same number of hours I do just because theirs is classed as overtime.

UnsolicitedOpinions · 13/10/2023 07:47

EmmKay13 · 13/10/2023 01:33

I agree with you. At a few times in my life I've had to get another job on top of full time job. 90% of those times I wasn't a higher tax payer, but was taxed heavily on second job.

In Covid times, my fixed term contract ended. I managed to get a job in my field, but for a lot less than my previous salary. So I took on a second job again, the amount of tax was insane.

I'm obviously not against paying taxes and NI, but think a earnings from second job / side hustle should be combined with earnings from main job and there be a earnings cut off before addition tax, rather than 2nd job taxed higher no matter your usual earnings.

Well this is what happens - your income from all your jobs is added up and the amount of the total that goes above the threshold is taxed at the higher rate. The second job is not taxed higher mo
matter your usual earnings.
If you did a tax return (which you would need to if you had two jobs) if you actually had been taxed higher for the second job without going over the threshold, then you would have got a tax rebate.

Original poster
Powfred · 13/10/2023 07:46

TorroFerney · 13/10/2023 07:40

Anyone that does loads of overtime presumably needs the money as well?

Show quote history

Then overtime should be taxed differently too

OP posts:
Flopsythebunny · 13/10/2023 07:46

Beautiful3 · 13/10/2023 07:36

Stop when you get to £ 1,000.

It's 1k turnover, not profit.
The 1k turnover is the point at which you'll have to fill in a tax return. If your turnover is £1100 you would have to fill in a tax return and pay tax on any profit from that.

Original poster
Powfred · 13/10/2023 07:45

Jumperseason · 13/10/2023 07:29

Yanbu, I resent paying tax even on earnings from my 'main job'. Wouldn't mind it if things actually worked in this country but paying money for half the country to be on strike, to phone the doctors and have to appease the gatekeeper receptionist into thinking you're unwell enough to access the health care you pay for every month, blah blah I could go on.

I think we get a rubbish deal personally :) my hope is Labour comes in, makes it all better for public sector workers, and I can go back to feeling grateful to pay tax and have access to great services. Is that wishful thinking 😆

Anyway, rant over. Yanbu. You're hardly raking it in in this cost of living crisis and you've paid tax all your life it seems. However it is the law and unfortunately you have to pay it.

Yes you make good points here. I've had some bad experience with public services, they're not working well yet we still are taxed heavily. Then you hear about public money being wasted (ppe, hs2) or large corporations/ wealthy people avoiding their share of tax. Yet a measly monetised hobby/ side hustle/ weekend job for some extra income can be taxed at highest rate. Just doesn't seem fair

OP posts:
Lucanus · 13/10/2023 07:43

Meandermoanda · 13/10/2023 02:31

You don't pay tax on the first 1,000

You can deduct the cost of materials, packaging etc from profit before paying tax too Any tech equipment or paper etc you genuinely need too.

You can either deduct expenses OR you can claim the £1000 allowance, but not both.

Savoury · 13/10/2023 07:43

The rate of productivity in the UK is lower than any other G7 economy because it doesn’t pay to be efficient, to innovate, to take risks, to work more..

Flopsythebunny · 13/10/2023 07:43

Morph22010 · 12/10/2023 22:55

You can deduct £1000 instead of actual costs so if you make £2000 you can deduct £1000 and pay tax on the £1000 profit. When you get to a point where your actual costs are more than £1000 you can deduct actual costs instead

This is wrong. You would lanyard on all profits.

Swipe left for the next trending thread