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.

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

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!

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

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

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.

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.

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

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.🙄

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.

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.

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.

An ISA wouldn’t help with the problem OP is complaining about. Nor would extra pension really since she talks about needing money for helping family/the cost of living crisis.

Quite agree OP you get off your arse to improve yourself don’t rely on state for income and as a thank you they take 40% of it
more than happy to pay standard rate just seems unfair

Do you set heating costs for your office against side job or can you employ DH as something ?

I really wish people would stop encouraging matched betting on here.

We have a gambling epidemic in this country with people having gambling debts of millions of pounds in all.

Gambling is an addictive pastime, and the industry only encourages it.

It doesn’t matter whether it’s (allegedly) risk-free. It’s still gambling, and it still encourages people into an industry which encourages addiction.

The reward is the money you are making ffs!

I get it OP.

The £50k higher rate doesn't feel as generous as in did in 2019 when it was introduced.

If you're needing to top up your income, then the tax can sting, as you're putting extra time into earning that money, and the tax immediately takes 40% . Feels like half.

I get it's frustrating.

But you want to make money from it, hence the tax. You wouldn't have to pay out for doing your hobby.

Your initiative is rewarded by being able to take advantage of different tax rates for employment versus self-employment.

And you're still making money - you've done your hobby and made money.

I’m a net contributor, have been for years. When I look at the enormous sums of tax I pay I do sometimes feel a bit pissed off. But, that’s just life in the UK. If you earn it and however you earn it, you’ve got to pay tax on it.

Everyone talks about the tax rate - but nobody ever mentions national insurance. Which goes down from 12% to 2%.

So the difference is less than people think - standard rate tax payers pay 32% on a lot of their earnings (the thresholds for tax and ni are different, but broadly similar-ish), higher rate 42%.

The difference is 10% of earnings, not 20%.

Don't forget you only pay tax on the profit, so set up proper accounting, keep receipts for anything you need to buy for this business. You will also have to pay NI as well as income tax.

You feel that you should be rewarded for earning more money? Because you've "taken initiative?!" OP, you're not a child warning oennies for chores you're an adult earning money for your time.
If you can make money from something you consider fun and a hobby, you should count yourself extremely lucky.

I’m a net contributor, have been for years.When I look at the enormous sums of tax I pay I do sometimes feel a bit pissed off. But, that’s just life in the UK. If you earn it and however you earn it, you’ve got to pay tax on it.

I get annoyed tax is disproportionate eg PAYE vs dividends/CG etc

It clearly isn't 'pointless' because even without doing what other people do and offsetting expenses you keep 60% of monies for something you claim you do for fun.

Stop doing your side hustle, or commit tax fraud, or pay your tax bill - you have the same choices as everyone else in a civilised country.

Tories have kept tax thresholds stagnant for a long time, which needs attention. But you're being silly to think a second job shouldn't be taxed.

What’s the side hustle? I know lots of people who do ebay/boot sales/diy/beauty treatments on the side & don’t declare it.