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.

"VAT is not a tax on your business"

It can be. If someone isn't VAT registered and is paying VAT on business costs, of course it's effectively a tax on the business. It's not clear from the post if they are VAT registered or not - they might just mean they are paying VAT on supplies etc.

How would you define or qualify a hobby?
What if I said cleaning or gardening is my hobby and I'm using my initiative by trying to earn a bit extra through cleaning people's houses?

They are. Which is why you don’t pay tax for first £1000.

tax is based on o stall income. Each individual income is not considered separately.

There is extensive guidance on the HMRC website about what constitutes a hobby as opposed to what constitutes a trade - all backed up by statute and case law.

It mostly centres around "badges of trade" which are frequency of transactions, profit seeking motive, etc.

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim20205

"Selling" your time, i.e. cleaning, gardening, is always going to be regarded as a trade rather than a hobby! If you wanted to "garden" as a hobby, you'd volunteer for a local park, RHS garden, etc and wouldn't charge for it. Of course, you could do it for "expenses" but then your expense claims would have to be reasonable and genuine, i.e. claiming HMRC mileage rates to going to/from the RHS garden and maybe a fiver for your lunch!

But, selling some "items" that you've previously used and enjoyed yourself for a period of time, i.e. a model railway collection, a piece of art, etc is usually not a taxable trade. It only becomes a "trade" when you start going to model fairs to buy, say, second hand trains with the intention of selling them for a profit pretty quickly.

Ok, I understand that, but but seems as though the OP is saying 'it's not FAIR!' that (assuming) she would have to pay tax on earnings from a hobby that she loves doing. For some people cleaning or gardening or whatever else is their side hustle. They have to pay tax on their side hustle, but the OP doesn't want hers to count as taxable income.

You need to declare as self employed income, potentially for ni as well (check current thresholds) the £1000 allowance is instead of expenses, work out which is better. As long as you keep a good spreadsheet you don't need an accountant, you can use the hmrc site yourself to declare

If your "side hustle" (vile phrase) is so profitable that tax has become an issue, then you need an accountant.

Yabu for saying “side hustle” it sounds stupid and wanky.
Ya also bu for thinking self employment should not be taxed.

But why should overtime etc be treated differently. People with ‘high’ salaries often don’t get paid overtime but have to work it in any case. Why should they be penalised? I earn a decent wage as an accountant but often work 10 - 20 hours over my contracted time to get work done. The high salaries are often there to compensate for this, but people with these jobs should pay taxes on all their income because they devote all their energy to one job / career instead of hustles?

Love these people who think they don't use up any services paid for by the government. Where do they think their doctors, civil servants etc. are educated - mostly in state schools. Unless you're literally not living here you are using plenty of services paid for by the tax payer.

Hate to tell you OP but I have to pay tax (shock horror) on my small amount of private pension. So why should your side hustle be exempt when you're already earning good money at your day job?!