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.

Yes I think it is the fact its a fun hobby rather than 'work' that makes me resent the tax bit perhaps. It's like taxing my fun/ leisure time as I enjoy doing it.

Oh well there's your answer then. Do it for free rather than charging for it. Have all the fun and don't have to pay any tax.

I also feel like there should be some sort of fiscal reward when you're taking initiative and trying to generate a bit of extra income in this way but I suppose it would be impossible to design such a system and it would be abused

Hang on... what do you mean "Trying to generate a bit of extra income"? I thought you said you were just doing it as a fun hobby?

You've not read my posts properly. I've said any second (evening or weekend) job should also get taxed more fairly. Don't think I'm special at all - trying to highlight how tax system is quite one size fits all and should take into account hobbies and extra jobs as ways to make extra cash in cost of living crisis

Anybody who has any job needs the money.

i disagree that it is somehow different because it is a ‘side hustle’, but completely agree that disproportionately penalising extra work is not good for the economy or the exchequer. I work freelance, and beyond a certain point (£50k ish + pension contributions) it is like why bother. I don’t even work full time, so from a broader economic perspective it is a missed opportunity.

Well how on earth would you distinguish a "hobby" from a "side hustle" then OP!?

Or from any other earnings?

Without opening a Pandoras Box where pretty much no-one has to pay any Income Tax at all?

Think about it.

@Powfred

I will vote Labour even though they'll probably make me pay more tax as they think people like me are rolling in it in the higher tax bracket.

The Tories love you to think that.

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

Yes it would be too complex to set up such a system that takes all this into account. Am aware of that. Plus it would be abused too. So we're stuck with current tax system where it's pointless trying to earn more or monetise hobbies once you hit higher tax rate

If your earnings are close to £50k it's very easy to just pay a bit extra into your pension to stay under the limit. If you don't want to do that, check out what tax-efficient purchasing schemes your employer will facilitate - you can buy a new bike, car or computer via an appropriate salary sacrifice system and are back under the threshold.

We have private health, used private schooling, and live at least 3 months of the year outside of the UK.

We still declare every penny of income for UK income tax and appreciate the services it goes to provide (no matter how the Tories have decimated them).

If everyone thought like you there'd be no services for those who need them.

FFS that didn't take long for you to cop on!

But why is it pointless to earn another 60% of an income on top of your main income?

I could understand if tax was 100% on the "side hustle", but if 60% is not enough maybe you're just rather unreasonable

There are no services anyway, so I'll keep the money I earn, thanks.

Yabu to use the term side hustle

An awful term that glosses over people having to take a second job or start a small business to make ends meet.

How can the response to a cost of living crisis be that a family needs more than two working adults to survive. If anything during a cost of living crisis we need more tax on higher earners to stop the divides widening.

Do you live in one of the countries that has low/no tax and few/no public services?

If not, you don't "receive nothing". The NHS trains the medical staff of your private health facilities and will perform the heavy-duty services you need if a surgery goes wrong or you suffer an emergency. You rely on the existence of a police service and fire service. You drive on roads maintained at public expense. You expect to be able to walk around without catching gruesome diseases, being confronted by the terminally unwell and untreated injured, or getting swarmed by beggars. You never have to pass fetid open sewers, you don't encounter rats everywhere you go and the streets you use are not piled with rotting filth. Robbery is not a daily feature in your life.

If you think I'm exaggerating, it's time you paid some visits to "less developed" countries and applied your thinking brain.

I don't particularly like paying tax but I have to pay it on all earnings - not sure why it should be any different for you!

This has to be a wind up. I can't take a second job because I work 60-70 hours in my current job but you should get part of your income tax free cos you really need the money!
Maybe we should all be able to opt into the 'I really need the money' tax free amounts🙄. I could certainly do with paying a lot less tax.

Of course you're being unreasonable. Income is income, whether it's from one, two or four different jobs. You don't get to pay less tax because you get it in several different chunks!

I have decided against taking on extra work recently because it would have been taxed at the higher rate (and I felt it wasn’t worth it). And then I realised that if we had a government that used tax money effectively, weren’t such a bunch of scammers trying to find ways to help wealthy people evade paying, and all our taxes went towards building public services we could be proud of rather than cutting things to the bone and outsourcing to private companies (and their shareholders)…. I’d have a total mind shift and want to do the extra work. Because I’d want to contribute to a fairer country we could proud of. I would want to work hard and feel the satisfaction that my extra taxes were going towards helping everyone. That we had such good public healthcare and schools that no one would feel the need to pay private companies for these, and that public transport was so efficient and affordable most people would prefer that than the hassle of taking their own car.

it’s been a long day and maybe I’m overtired and losing the plot, but maybe it’s not paying taxes that’s the problem, but instead its the government.

Exactly. When I was self employed in addition to my PAYE job that's exactly how it worked. I don't see any justification for expecting to pay less tax on a second income.

The suggestions above that she should find ways to not declare it are pretty disgusting as well. I bet posters suggesting tax avoidance or even tax evasion are very scathing about those they perceive as benefit scroungers.

It’s income regardless of how you get it

so cough up or don’t do it or take a chance and hope you don’t get caught and fined but stop whinging

I agree OP. I'm on the £50k border and was thinking about a side hustle but it's just not worth the bother to only keep 60% of what I'd make. £50k threshold would be £65 if it had kept up with inflation. We pay far too much tax which is then wasted and pilfered by our crooked corrupt government.

why should earned income not be taxed, or taxed a lower rate because it comes from a different source?
Compared to an additional £6k increase in income from your salaried role, you won't be paying NI on it, and if your repaying a student loan, you won't get deductions for that either.

If your “side hussle” brings in £20k would you still expect to pay less tax cos you enjoyed it more than your primary job?

Do you think someone working three part time jobs to make a full time income of say £25-30k should pay less tax on two of the jobs because they already have one or is this lower tax idea only for higher earners on more comfortable wages?

Its the system we agree to work in and just because your hobby earns you money doesn’t make it less of an income generator than working in a cafe a few hours a week on top of your regular job.

It’s part of the social contract. We agree to pay the relevant taxes for access to health, education, care and defence among other things.

You are only being unreasonable if you don’t feel the same resentment on behalf of every small business.