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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:
mushti · 13/10/2023 05:14

If your side hustle isn’t worthwhile from the point of view of the money it earns you compared to the time you expend on it, put your prices up or stop doing it.

Giving you a tax break on your hobby is an anti-competitive subsidy to you, disadvantaging anyone who uses the same business as their main source of income. If you can’t compete on fair terms as everyone else, get out of the game.

And grow up.

NoMoreLifts · 13/10/2023 05:11

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.

You pay tax on your total income. It looks more on your second job cos you have used up your tax allowance on your main job.
OP - pension and iSA are your friends here.

Bigbrotherpropoganda · 13/10/2023 04:53

Its earnings
Just like any second job or a higher earner with one job.
Calling it a side hustle doesn’t mean it’s not taxable.

Tessofthebicyles · 13/10/2023 04:45

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

I Haven't RTFT but if you are paying VAT on your 'side hustle' then it must be turning over £85,000. That's some hustle !

Of course you need to pay tax like anyone else.🙄

Oblomov23 · 13/10/2023 04:29

OP seems to have a very odd view of income, be it from different streams/sources, and her already used tax free allowance.

HoppingPavlova · 13/10/2023 04:21

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

And the rest of your Party would sit in the room looking at you like you had two heads and didn’t understand the concept of tax. Then they would refuse to endorse it. Because it’s madness.

HoppingPavlova · 13/10/2023 04:19

This is literally the whole point of tax. You earn, you pay. Doesn’t matter how you earn, you pay. There is no distinction on wanting to pick up more work and tax being unfair, that’s insane.

Can you imagine if it was no tax on a second job! Everyone would be doing bare minimum in job 1 to put max hours possible into job 2, while it still coming in under hours for job 1. The whole thing is unworkable. You earn, no matter how, you pay. Simple.

Maybe concentrate efforts into getting professional advice on how to structure your hobby/side hustle so that it legally minimises tax as that should be possible.

MiddleParking · 13/10/2023 04:00

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 think ‘stick to the day job’ is probably appropriate in every sense here.

EastCoasting · 13/10/2023 03:09

I think we should tax people every time they say the phrase ‘side hustle’ 😄

AsWrittenBy · 13/10/2023 03:06

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

You still haven't said why though?

If side hustles are tax free, then I'll do 1 hour in my main job and then 34 hours plus in my side hustle!

TheHappyCarrot · 13/10/2023 03:02

My heart bleeds for you and your 40% tax bracket income.

babyproblems · 13/10/2023 03:02

NeedingCoffee · 12/10/2023 22:48

Lots of options here OP; a half decent accountant will make sure you keep much more than 60%

This. See an accountant. X

tamade · 13/10/2023 03:00

Spend all of the side hustle money on business related expenses and don't show a profit. Presumably your household lent the side hustle the seed money so that loan needs to be considered.

I would resent paying taxes on a side hustle too, I resent paying any kind of tax, despite accepting the necessity. But I especially resent the fact that individuals trying to get a bit extra and who have little access to complex financial advice/scams end up paying full whack when massive corporates get away paying hardly anything (Starbucks? etc.)

greenspaces4peace · 13/10/2023 03:00

@LuluBlakey1 do double check but materials can include laundry soap/household cleaners for clean up following the work paper towels comes to mind, some aspects of your lighting and heating plus some reasonable furnishing (new table lamp for lighting, ergonomic chair etc. all within reason). any storage supplies for your products so totes and bins and tarps comes to mind and possibly even some car fuel on both purchasing supplies and delivery.

Meandermoanda · 13/10/2023 02:48

AlwaysPrettyOnTheInside · 12/10/2023 23:40

I don't. I receive nothing. I have private healthcare too.

Show quote history

Seriously? No roads, street lights, infrastructure. Do any employee use public services? Do your bins get emptied?

Meandermoanda · 13/10/2023 02:38

LuluBlakey1 · 13/10/2023 01:19

I paint - cards and pictures. I have been asked several times recently if I would sell things. A friend offered to buy a set of 6 cards for £3 each. I just gave her them (there were lots in a box I'd put them in). Then her SIL asked if I would do her a set and she'd pay me £4 a card. I said I wasn't interested but it got me thinking.

I wouldn't be earning anything at all from it. It would take about 3 hours to paint each set - then there's the cost of paints, cards, envelopes, then time. But I paint them anyway- just like doing it and I send them on birthdays etc. A couple of friends have asked about buying paintings. I've just said I don't sell them or do commissions- but perhaps I could: I have a 'studio' full of them. It has got me wondering.

So have I understood this correctly, if (after materials), I earn less than £1000 a year, I don't have to pay tax on it?

I think this is correct. If profit minus cost of materials is less than 1000 you don't pay tax. But other posters have made me unsure' I will check

Meandermoanda · 13/10/2023 02:36

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.

Your proposal is how it is supposed to be. Op is being charged higher taxes because she's a higher earner. Not because it's a second job. Most pay the lower tax on hobby earnings

Meandermoanda · 13/10/2023 02:33

Also .. now you know the tax you'll pay, look again at the prices you charge to make the desired amount

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.

Millybob · 13/10/2023 02:29

Side hustle sounds like you're playing three-card monte on a street corner with your OH keeping an eye out for the rozzers.
Of course, that would be tax-free.

AfterWeights · 13/10/2023 02:29

Ps your side hustle involves charging vat,not paying it. And you shouldn't need to charge it unless bringing in quite a lot of income.

AfterWeights · 13/10/2023 02:28

If the government offer lower rates for "side hustles" you end up where higher earners structure their income to take advantage of it. Fair?

How is your "side hustle" more worthy of a lower rate of tax, than a nurse working an extra night shift each month to pay for christmas?

Reality is, you thought your side hustle was more lucrative relative to the time spent than it really is. Its disappointing. But thats life, you don't get to contribute less tax by working 5 part time jobs rather than 1 full, or by being self employed.

AsWrittenBy · 13/10/2023 02:24

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

Why shouldn't your income be taxed? Why does it matter how many hours you work to get it? Or what you do?

greenspaces4peace · 13/10/2023 02:22

depends on the hobby where i live; food related hobbies are tax exempt. then there is capital allowances on supplies needed to run and keep the business going, again where i live these can be deferred for up to 7 years (often the first year you need quite a few supplies but have low returns).
you don't necessarily need to hire an accountant, in our case dh had a 1-1 phone call with an accountant from hmrc to review the process.
in our case we registered the company file taxes and get a nice return twice a year.
Claim capital allowances: Overview - GOV.UK (www.gov.uk)
dh uses quicken business, which tracks all his milage and allows him to take photo's of all receipts for filing taxes.

Claim capital allowances

Claim capital allowances so your business pays less tax when you buy assets - equipment, fixtures, business cars, plant and machinery, annual investment allowance, first year allowances.

https://www.gov.uk/capital-allowances

Millybob · 13/10/2023 02:22

Wait until you're paying tax on your pension - then you'll really resent it.