Why does my side hustle tax bill seem so high?

[labtest57]

Hi
I am looking for some advice please. I work full time and pay paye tax on that job, but have been making extra doing surveys as a side hustle and this tax year have earned just over £2000. Today I attempted to fill in a sole trader tax return and the final calculation said I owed just over £800. By my calculations, with one thousand tax free and 20% tax on the rest, I should only owe £200. I have contacted HMRC and am passed from pillar to post and still none the wiser. I had to give all full time job info but surely that ia irrelevant anyway.

She’s not in the next tax band. She earns £24.000. Plus £2k extra.

I had a similar problem with declaring income of around £2000 for Self Assessment and ending up paying too much tax on it. Last week I phoned the helpline at 8 o’clock in the morning, so I was first in the queue, and spoke to someone who was very helpful and patient! It turns out I had omitted some figures from the online form which resulted in an incorrect tax amount. She talked me through how to put this right, in my case I had to do it by letter because it was for a previous tax year. Today I have received an email from HMRC to say my refund is pending and my tax records have been corrected.
Maybe give them another ring to try and get this sorted. Don’t do what I did and ignore it as I was also charged fines and interest on my outstanding tax bill! They have agreed to refund this in full though 😅

Not the same thing though. Self Assessment can cover 'other' income and isn't just for use by those who are self employed. Lots of different reasons to have to complete a self assessment form. Sole trader is a specific description and isn't what the OP is. She does surveys and gets paid for them

Have you actually claimed the trading allowance on your tax return?

Was the tax deducted from your salary £2283?

Yes

I think there is something going on that has been missed. Do you have any P11d benefits?

I was told I had to file as a sole trader

"A sole trader is a self-employed individual who owns and operates their own business"

but you dont own or opperate a business, your paid to do surveys by someone who has a business.

I presume this is your issue. For 2K you shouldn’t be a sole trader. The only thing you need to fill out is the additional income box on the main self assessment form. This is what I do and have done for years.

Well that’s incorrect.

Is taking surveys considered an income? I used to work in that industry but we did qual interviews and the payments we gave people were always classed as 'a gift'. When you take a survey you're doing so as an individual, not running a business as a professional questionnaire respondent?

This

Bit alarming that those working in tax don't understand this.
Obviously easiest way is to keep earnings under £1000, but appreciate this isn't going to work for you.

From MSE, my bold for emphasis https://www.moneysavingexpert.com/family/make-money-surveys/

Do I need to pay tax on online survey income?
Before you start counting the dosh, there's a possibility some of it may belong to the taxman – though for most people this won't be the case, especially if you're just doing it as a hobby. But if you get serious with it, or already have income from self-employment, then you might need to pay tax.
Survey earnings are technically self-employed income, as you are being paid for a service you provide, even though that 'service' is in the form of providing data for the survey company.
The trading allowance essentially means you no longer have to report the first £1,000 you earn from self-employment or selling goods 'for profit'. Therefore if not already registered as self-employed, you won't need to do so if earning less than a grand from survey sites.
If you're earning over £1,000 from these income-boosters, you'll need to declare it to HMRC, regardless of whether you're self-employed or PAYE. It told us everyone must do this by registering for Self Assessment, if not already registered, and filling in a tax return. If PAYE, HMRC says it can collect your tax bill through a change to your tax code, providing you meet specific criteria.
If you're self-employed with total income over £1,000, if you earn just £1 from survey sites, HMRC appears to say you'll need to declare it. HMRC told us: "If an individual has combined gross income of more than £1,000 from their self-employment trades in a tax year, they must report this to HRMC."

Op have you considered paying £150 or so and using a service like tax scouts accountants? When I worked full time and also did freelance work on the side, I usually paid around £1000 on my tax. I earned 40K a year and from the “side hustle” I declared an additional 10K with about 2-4K of that in expenses.

I think it’s worthwhile to use an accountant for the first couple of times at least, so you have a better idea of how it should be done.

For such a small side hustle most people would probably not have declared it. And certainly not if it pushes you into a higher tax bracket.

Are you based at home doing the surveys? In which case you can claim the working at home allowance of which HMRC give examples. This can include part of your rent, mortgage, council tax, heating costs, phone etc. Each month I pass 33% of my fuel and services bill back to the tax man. I dont have a mortgage but when I was renting I passed some of that back too. The whole idea of being self employed and working at home is to manipulate the system to your greatest advantage.

OP as the survey income is below the national insurance threshold whether you enter it as trading income (sole trader) or other income would result in the same amount of tax payable so that's not causing your problem.

Does the tax calculation not show what the extra tax is being charged on.

I think i will have to

No it doesn't which is infuriating

If you haven't already submitted the return remove the entries from your side hustle and recalculate the tax. This will show whether the tax is because of your salary or other income.

OP are you looking at the summary or full calculation. When you select view calculation it may just show the summary but if you scroll down you should see a link to view the full calculation

Go onto a paye calculator and enter your p60 income only to check if that's the issue. Money supermarket etc have one

Thanks I will

A sole trader for this purpose is someone who has self employed income. And this is what survey income is. it's right for it to go under self employment and as a result she qualifies for the £1k trading allowance.

She can't claim all that AND the Trading allowance, it's one of the other (i.e the one that is worth more)