To resent paying so much tax on side hustle earnings?

[Powfred]

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.

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.

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

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

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

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

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

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.....

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.

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

I didn’t see the tax dodge posts!

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

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.

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

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

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.

*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.

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…

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

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.

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.

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

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.

Of course you have to pay tax ffs!

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.

Accountants fees are tax deductible and well worth it!