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.

And how much would they charge!

YANBU OP - the bands are far too low. And it’s putting off people in public services such as NHS doing overtime work - what’s the point when they only receive 49.5% of what they would earn?

Fair play ☺️, no it was another poster who made the little men comment. It’s not straightforward at all, nothing about tax is. Apologies I was probably overly harsh, I hear it a lot though so it’s not just you!

I expect you walk on footpaths, that they are lit by streetlights, you drive on roads, have your rubbish bins emptied, your recycling taken away and dealt with, possibly a garden waste bin emptied, can benefit from the actions of emergency services like police, fire, ambulance. You realise your private healthcare staff have all been trained by the NHS, and that the NHS picks up the pieces when private healthcare goes wrong and you need intensive care unexpectedly? You would expect to benefit from the protection provided by the armed services, from missile interceptor systems if we were under attack. We have an education service, live in a system of democratic government- you benefit from that. If you attended private school- those staff were trained by our university and state school teacher training system.
You are entitled to free health care, free compulsory education for you and your children, will receive a state pension, benefits when you are in need of them.
You live in a country where, on the whole, law and order is maintained and an infrastructure is maintained.
Our cultural, environmental and architectural environment is often (but not all) maintained by government funding. Arts and sports receive millions in grants to subsidise them.

That's why you pay taxes.

Agreed.

Yabu to see side hustle income as different, it's not and shouldn't be. Yanbu to be irritated at being in one of the numerous bottlenecks in our tax system, but as others have said you can likely deduct stuff.

Look into matched betting OP - I found out about it on mumsnet. Not taxable, not gambling and a few hundred a month is completely achievable. The welcome offers alone are worth around £700.
I use and love Oddsmonkey.

There are incentives for being entrepreneurial, usually in the form of small business start up help. But that is probably geared to people not still employed full time.
There is a lot of very useful information on HMRC website about what you can claim as expenses but be careful you don’t then fall foul of other rules, change of use of house etc.
You would need to include the tax you will be paying when pricing your product or service.
And a warning from someone who has been there, it is easy for something you love to become a chore when you need to make creative decisions based on economics!

It used to be zero it was reviewed a few years ago and got put up to £1000

Maybe not less actual tax, but less deductions overall - you won't be liable for national insurance on the first £12k ish of profits, so about 12% less.

@Flopsythebunny I am absolutely not wrong I am a chartered accountant and do tax returns for a living. If you have self employed income you can either deduct your actual costs or can decide just to deduct £1000 instead of actual costs. I

^this - you need to incorporate.

Whoever invented PAYE was an evil genius.

You are the same person - yet

When you are paid net you don’t feel the pain
When you see the cash and hand it over you resent it

multiply that by all employed workers - and this is why we don’t rebel

Why are you voluntarily paying VAT?

You only get £1000 of tax-free dividends now, which is soon to be £0.

A lot of people work for less than 49.5% of what those people on higher tax bands earn. It can't be that pointless.

@Kwasi 😫

This is the advice that my husband has received from his accountant so I would guess @Morph22010 is correct 🤣

If you don’t want to pay in, you’d better not be taking any benefits out that the rest of us are all paying for.

You know, like roads, streetlights, schools, hospitals, police, fire brigade, bin collection, safety standards in buildings, etc etc etc.

Its called being a responsible member of society. If you don’t want to be a part of civil society you could always take your chances somewhere like Haiti where there’s no functioning state?

There are advantages if you're primarily a B2B business - it makes no difference to your clients, and it adds a degree of credibility. It's different if you sell to the public.

My clients are all businesses, I'm voluntarily registered. It doesn't prevent you having a non-VAT registered side-hustle if you can demonstrate that the two are not technically linked.

I understand the different reasons; I am also voluntarily VAT registered. I was curious as to OP’s reason. In my head, when people say ‘hobby business’, I tend to think of B2C rather than B2B, but that’s based on previously having a hobby business of my own.

Tax deductible does not mean they are free though.

An accountant comes at a cost.

If someone has low profits, do you think an accountant would increase the net amount they take home themselves?

Which is basically what someone hopes for.

And corporation tax is payable on the profits, out of which dividends are paid!

Yes. Perhaps not the first year if the business makes very little, but I found the advice invaluable. Now I can pay for one more easily, but I wish I had employed one sooner.

hope you dont live in scotland! think of this! Earning of £50k per year you would take home £3168 per month in england! In scotland you would only take home £3069 from the same earnings!!!

I think of taxation as a subscription to civilisation. You want low tax, there are low tax jurisdictions to live in. In the UK, perennial complaining notwithstanding, we have it sweet.
If you could be assigned a different place to live completely at random or stay here, would you really take the gamble? I wouldn't take that punt, personally.

Your comment about VAT indicates to me that you really don't know enough about finance to be running your own business profitably. VAT is not a tax on your business.

If you know you will have to pay a higher rate of tax on your profits, then you need to be selling whatever it is at the right price to reflect that built-in cost. In any case, you would only pay tax on your profits, so you need to look at what expenses you can claim against your business income.