It seems more and more common for people to now have a ‘side hustle’ as well as their main job. According to Henley Business School the growing trend in ‘side hustles’ shows that as many as 1 in 4 people in the UK are running at least one business project alongside their main day job, contributing an estimated £72 billion to the UK economy.
A ‘side hustle’ is not always just to increase their earning potential, it’s often a way of pursuing a personal interest or fulfilling their entrepreneurial dream. Whatever the reason, people are often scared by the implications of earning this extra cash and getting caught out by the tax man, but if your side hustle really is just a little extra cash on the side, you may not have to pay tax at all.
There are two special tax allowances to help you earn a little extra tax free– the trading allowance and the property allowance. Both let you earn up to £1,000 of trading or property income each financial tax year and not pay tax on this income.
The Trade Allowance
It not only covered the more traditional sale of goods, for example through eBay, an online shop or at a farmers market but also the sale of services, so you could be a babysitter or blogger.
The Property Allowance
The property allowance means you can renting out physical space you own such as renting a room via AirBnB, or perhaps your driveway for parking.
The great news is you don’t even need to let the tax man know you’re making this money if it falls within these allowances. If your income from these sources exceeds these limits, then you will have to register for self-assessment and let HRMC know.
If you are note sure about this or any self-assessment regulations, ask an accountant and make sure you are doing it correctly and stay compliant to avoid any nasty surprises.
Blog by Chamber Member Kingston Burrowes Accountants