A side hustle is a job that you do alongside your normal employment. Whether it’s to earn extra money or pursue a passion, they are becoming increasingly popular with workers in the UK.
For example, you might work as a bus driver Monday to Friday for your main form of employment, but every Saturday evening you make extra money from your ‘side hustle’ as a musician in your local pub. Other common sideline incomes include things like Depop and Vinted, as well as crafting and selling items such as masks during the pandemic.
Side hustle and other forms of freelancing are becoming very popular with workers in the UK. They’re a great way to make additional income outside of their main job. Not only that, they’re ideal for someone to pursue their passion, whilst still earning a solid income to support themselves. However, what many people don’t realise is that there are tax implications.
Income earned from a side hustle is untaxed, unlike the money you receive from PAYE employment. In a full-time job, Income Tax and National Insurance is already deducted before you receive your wage. Whereas with side hustles and freelancing, you’re solely responsible for paying tax on any earnings you make.
Everyone is entitled to an £1,000 tax allowance of additional income outside their regular work. If you earn anything over that from your side hustle in the tax year (6th April – 5th April), then you’ll need to inform HMRC and submit a Self Assessment tax return. Failing to do so will result in hefty fines and interest on late payments..
The amount of tax and NI contributions you’ll pay depends on how much you earn with your side hustle, and how much you earn in your full-time job. You might find that your side hustle pushes your overall earnings into a higher tax rate band, meaning that you’ll pay more tax on those earnings.
Of course! We advise that you start a comprehensive spreadsheet to keep track of your taxable income and relevant expenses throughout the year in order to make your tax return more straightforward. This can be done on an Excel spreadsheet or Google sheet to keep things simple! Contact our team for more advice today!
There’s a lot to navigate with your accounts, so let our team help you get set up! Our experts are well versed in Self Assessments, Capital Gains Tax and accounting, so contact us today.