Side hustles and tax stuff

Diddums

Diddums

Diddums

Caporegime
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I'm considering starting up a side hustle, or even two. Just me, two different businesses, doing the odd thing here or there. I might grow them in to something more, I might get bored and jack it in after a month, but to do this I need to know what the tax implications are.

I'm in the 40% tax bracket, not sure if that is relevant at all.


Is there a "tax free" threshold? If there is, what is it?

I'm sure I'm not the only one with this kind of thing, hoping some of you lot have done similar and can offer some tips!

Cheers :D
 
Diddums said:
I'm considering starting up a side hustle, or even two. Just me, two different businesses, doing the odd thing here or there. I might grow them in to something more, I might get bored and jack it in after a month, but to do this I need to know what the tax implications are.

I'm in the 40% tax bracket, not sure if that is relevant at all.


Is there a "tax free" threshold? If there is, what is it?

I'm sure I'm not the only one with this kind of thing, hoping some of you lot have done similar and can offer some tips!

Cheers :D
Click to expand...

It's £1000
 
It's in the other HMRC thread, but you will have to declare it if the turnover (or Gross income...i forget) is more than £1000.

Your PAYE job has already used up all your threshold...so you have to pay 40% on it all, if you are setting it as a sole trader. I don't know what happens if you do it as a limited company and then do all the tax avoidance stuff like dividends.

My advice is get a separate account set up for your side business, it will make doing the tax submission much simpler.
 
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Some places such as ebay may now report total revenue over £1k resulting in you probably needing to complete a self assessment once you hit that in turnover.
 
only fans will never catch me and hmrc will never catch me.

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Not an expert but if your pension is paid via salary sacrifice you can probably opt to sacrifice whatever you earn on the side via your company to save on tax.

E.g., you earn £5k, so pay another £5k in your pension via salary sacrifice.
 
Pho said:
Not an expert but if your pension is paid via salary sacrifice you can probably opt to sacrifice whatever you earn on the side via your company to save on tax.

E.g., you earn £5k, so pay another £5k in your pension via salary sacrifice.
Click to expand...

Excellent idea, I'll look in to this, thanks!
 
Diddums said:
Excellent idea, I'll look in to this, thanks!
Click to expand...

Just to expand a little.. when you fill in your self-assessment they look at your total income.

So say your salaried earnings are £56,270 (40% tax bracket is £50,270), then £6000 of that would be taxed at the 40% bracket. With salary sacrifice you basically take a salary reduction, but your company pays the equivalent reduction into your pension. So to be smart, you would pay at least £6000 (£500/m) into your pension over the year, reducing your salary down to £50,270 and therefore no 40% tax.

And so if you then earn say £5k on the side which would have been taxed at 40% as you're going over £50,270 again you can use the same trick to get yourself back down, and top up your pension tax free (ish).

I do a tiny bit of work on the side and I just tend to pay an accountant to sort it. They charge about £230 and it saves a lot of time and stress and usually saves me more than they cost from certain expenses you can claim for etc.

* As far as I'm aware this is all legal, don't come for me HMRC :D
 
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