Gov UKs Help For Hustles – Understanding the tax rules

If HMRC is not an organisation that you immediately associate with Valentines Day, think again! 

Earlier this year, they launched a Help for Hustles campaign designed to help people understand the tax implications of side hustles more clearly. 

The Help for Hustles Valentine’s Day campaign encouraged anyone who has created a successful side hustle to ‘put a ring on it’ and make it official.

But what is a side hustle? Is it something that anyone can do – and, if so, how do you choose the best one for you? What difference can it make financially? And do you have to pay tax on what you earn?

In this article we answer those questions and more!

Image from: https://www.gov.uk/government/news/love-your-side-hustle-make-it-tax-official-this-valentines

What is a side hustle?

A side hustle is some kind of work that you do in addition to your main job. A side hustle enables you to earn extra money without the hassle and expense of starting your own business. 

Side hustles vary enormously in the type and amount of work involved. Finding the right side hustle for you will depend largely on your existing skills and interests, and also the amount of time you have available and want to spend on it.

What are the advantages of a side hustle?

The main reason that most people consider a side hustle is to earn extra money, and we will take another look at this later in this article. But there are also other advantages to taking on a side hustle. These include:

• Developing your existing skills and learning new ones;
• Making good use of some of your spare time instead of frittering it away;
• Creating the potential to develop your own business in future and change your career completely.

How to choose the best side hustle for you

The most important thing when considering a side hustle is to find something that interests you and that you think you will enjoy doing. Even if your side hustle is totally motivated by the need to make extra money, it will be more successful in every way if it matches up with your interests and values.

A helpful checklist of things to think through when considering a side hustle are:

• Do I already have – or am keen to learn – the skills to do this?
• Do I have time to do the job without it affecting anything else?
• If there are set hours I need to do, are these possible for me?
• Is the money I could earn worth the effort I would need to put in?
• Would I enjoy it or find it stressful?

What are the most common side hustles in the UK?

Some of the most popular side hustles can be done from home, which is the most convenient way of fitting your side hustle around other commitments. These popular side hustles include:

• Selling used goods online

This is a very easy side hustle to start with and – as we’ll see later – if it’s your own stuff it’s tax free too. All you need to do is start having a massive clear out and listing items such as clothes, accessories, household items, books, games etc on online platforms such as eBay, Facebook Marketplace, Gumtree, Vinted and Depop.

If you become well-established as a seller, you can take this a step further by searching for good quality items in charity shops and car boot sales then reselling them online.

• Selling homemade products

Another variant on selling items is to create items from scratch then sell them either online or at local outlets such as events, market stalls, craft fairs or independent shops. Popular items include baked items, handmade jewellery, handbags, scented candles, artwork etc. If selling online, you could set up your own simple website or use platforms such as Etsy, eBay or Instagram.

• Tutoring

If you are skilled in an area such as a language, a musical instrument or an academic subject, tutoring could be a side hustle to consider. Whether it’s school age students or adults wishing to learn more, there is demand out there, and private tutoring of any kind can earn you a good rate per hour. 

You can get started either by word of mouth or by signing up to a national or local tutoring platform.

• Content creation

If you have good creative skills such as writing, video production or music, you may well be able to find freelance work based on your skill set. Check out freelance websites such as Upwork or Fiverr, recruitment sites such as Indeed, or professional networking sites like LinkedIn.

Another option would be to start putting yourself out there with your own website, blog, vlog, or social media channel to attract followers. Once you have a solid following you may then be able to earn money by attracting advertisers or affiliate links to companies relevant to your content.

• Photography

If you are a keen photographer this could potentially make money for you. Many platforms such as Shutterstock, Adobe Stock, and Getty Images will pay for high quality images. So it is worth investigating what they are looking for and approaching them if you have images to offer.

• Translating

As more and more companies are doing business globally, there is increasing demand for translators. So if you are fluent in one or more languages you may well be able to earn extra cash translating. Look for freelance opportunities on recruitment websites such as Indeed, or freelance websites such as Fiverr or Peopleperhour.

• Completing surveys

Another home-based side hustle option to consider is to offer your services to companies to help with surveys and focus groups. This normally involves sharing your views either by completing online surveys or participating in group discussions, usually through a web link but sometimes face to face. Check out survey sites such as YouGov, Ipsos and LifePoints. Every survey company is different, but most have some kind of points system. You get points for doing surveys, and once points reach a certain level you can exchange them for either vouchers or cash.

However, if you normally work from home and would actively like a side hustle that gets you out for a change of scenery and/or to meet new people there are many other options available, for example:

• Domestic services : cleaning, DIY, gardening, car washing, decluttering or admin help can all be in demand and can generate additional income for you.
• Petcare : if you have the interest and are willing to learn skills as needed, you could sign up with a pet-sitting, dog-walking, or grooming agency or longer-term offer pet-boarding services.
• Babysitting : it’s a good idea to begin with the children of close friends and family to build up reputation and references, then add to your experience and demand by learning more about how to deal with the potential challenges involved.
• Focus groups : giving your opinions on a product or idea, either remotely or face-to-face. Check out platforms such as Paid Focus Groups and People for Research. 
• Mystery shopping : giving feedback about retail experiences such as shops, restaurants, service stations and other general customer facing situations. Start by signing up with a mystery shopper company such as Secret Shopper of Mystery Shoppers.
• Delivery driving : if you have a car, motorcycle or even a bike, you could make deliveries for a provider such as Just Eat or Deliveroo, or a local courier service.

How much can I earn from a side hustle and do I have to pay tax?

According to recent research by Finder, 39% of UK adults have at least one side hustle as an additional source of income. 24% earn between £1 and £200 a week from their side hustle, but the overall average income is higher, at £210 a week – or £914 a month. 

But do you have to pay tax on this money? 

Current HMRC rules are that anyone running a side hustle can earn up to £1,000 per tax year without having to pay either tax or National Insurance on these earnings. But if your side hustle income is greater than this you would need to register as self-employed with HMRC and complete a Self Assessment tax return. 

The exception to this is if you are selling your own used stuff online. HMRC guidance on this is “Just casually selling some unwanted personal belongings from time to time? It’s unlikely you’ll need to pay any tax on this.”

You can find out more about whether you need to pay tax and how to sort it out if you do on HMRC’s Tax Help for Hustles page.

We hope that the above information helps you to understand more about side hustles and perhaps inspires you to get involved in a side hustle this autumn.

Meanwhile, if you are in need of any financial help – for example an emergency loan to sort out an immediate financial issue – remember that Loans 2 Go offer a range of personal loans which may be able to help.

For more useful financial and lifestyle tips, visit us here again soon at Loans 2 Go.