Side Hustle Tax

With more people using side hustles to boost their income, understanding the tax implications is crucial. This blog post aims to clear up some of the confusion over side hustle tax in the UK.

Understanding Side Hustle Tax

Taxable Income

Side hustle earnings are considered taxable income, and it’s essential for you to accurately report these earnings to HM Revenue & Customs (HMRC). Whether it’s income from freelancing, selling handmade crafts, or providing consulting services, all sources of income should be accounted for. This has not changed despite what you may have seen in the media.

Registering with HMRC

If you have a side hustle that earns you more than £1,000 you need to register with HMRC for Self Assessment. This registration process is straightforward and can be done online, ensuring that you stay compliant with tax regulations.

National Insurance Contributions

In addition to income tax, individuals earning from a side hustle may be required to pay National Insurance contributions.

Expense Deductions

One of the advantages for side hustlers is the ability to deduct certain expenses related to their business activities. Accountants work closely with their clients to identify legitimate business expenses such as equipment costs, travel expenses, and marketing expenditures, which can help reduce the overall taxable income.

Record Keeping

Accurate record-keeping is paramount for side hustlers. Accountants should encourage their clients to maintain detailed records of income and expenses throughout the year. Digital tools and accounting software can streamline this process, making it easier for accountants to assess the financial health of the side hustle and ensure compliance.

Side hustle Tax Planning

A proactive approach to tax planning is essential for side hustlers. Accountants can help their clients anticipate tax liabilities, explore available tax reliefs, and strategise on how to optimise their tax position while staying within the bounds of the law.

Understanding Side Hustle Tax

Understanding side hustle tax can significantly impact the financial health of your venture. By taking advantage of deductions, you can optimise your side hustle tax situation and keep hold of more of your hard-earned money.

Remember, this article is meant as a general guide, and tax regulations can change. It’s always wise to consult a professional accountant who specialises in creative industries or self-employment to ensure that you’re fully compliant and making the most of your allowable expenses.

Helping you with your Side Hustle Tax

Or just email us if you want our:

New Business Start-up Checklist, or;
Business Plan Template, or;
Help with
- Bookkeeping
- Software
- Accounts
- Taxes

Achieving Success with your business

If you’re just starting your new business venture or struggling with the steps to the next level contact us now.

We can help you with this and much more

Get ready for success with Moore Financial Management

We can help you with all of your compliance obligations such as:

Self Assessment Tax
Making Tax Digital
Corporation Tax
Filing Accounts
VAT
Payroll and Pensions

But also the things you really need to increase the chances of your business being a success

Management Accounts
Cashflow Reporting & Forecasting
Budgets
Real Time up to the minute information

These are the things that add value and the information you need in order to make the correct business decisions

If you’re not confident with any of this or don’t have the time, getting a licensed accountant to do it for you can actually save you money. It can free up your valuable time which you can use to concentrate on your business. You can also benefit by knowing it has been done correctly and on time.

Mistakes can be costly.

As can missing deadlines.