The gig economy has given rise to a plethora of side hustles that have allowed people to take on a secondary income to supplement their pay or start a business they have always dreamed of.
However, with additional income comes a greater misunderstanding about side hustle tax and the responsibilities you have to manage the additional income and pay tax.
This article is designed to inform and enlighten individuals about side hustle tax on topics such as: what expenses can I claim from my side hustle, when do I need to pay my side hustle tax, and what happens if I don’t declare my side hustle income.
What’s the difference between a side hustle and a job?
The difference between a side hustle and a job is that a side hustle is work you do or a business you start while working for an employer. For example:
A side hustle could be driving for Uber in the evenings while working a full-time job during the day, for example, as a teaching assistant for a school or college.
You work for McDonald’s full-time, which is your employer, and then in your free time you work for Deliveroo as a delivery driver.
What happens if I don’t declare my side hustle income to HMRC?
It is important to keep up with deadlines relating to your tax obligation since you can receive fines and interest charges from HMRC, which, if left, can very quickly escalate and increase daily.
Failure to submit your self-assessment tax return on time:
1 day late: will result in a £100 fine.
3 months late: up to £1000.00 fine.
6 months late: all previous fines (£100+£1000) plus either a £300 fine or 5% of the tax due (whichever is greater).
12 months late: a further £300 fine plus 5% of the tax due.
Can HMRC find out about the income I have from my side hustle?
The bad news for anyone looking to avoid telling HMRC about the income they receive from their side hustle is that they should be cautious. Unfortunately, HMRC has various mechanisms in place to detect undeclared income, such as data matching and risk profiling.
Furthermore, the following companies now share information with HMRC about the people they have working for them and what income they have been receiving, so it is more important than ever to accurately report all sources of income to avoid facing financial and legal repercussions.
Deliveroo
Uber Eats
Uber
Etsy
Facebook Marketplace
Ebay
Can I get help with my side hustle taxes?
Side hustle tax can be a little confusing, so it is strongly advised to speak to an accountantwho can help you navigate this stressful, paperwork-heavy downside to side hustles.
While there is a cost associated with this kind of support, the benefit will not only reduce your stress levels but also help to minimise any side hustle tax that might be due, as well as ensure you file the correct paper on time and avoid any nasty penalties or fines.
How does my side hustle income affect my main job tax?
It is important to be aware that your side hustle income could push you into a higher tax bracket, which may result in you paying more tax. The reason for this is that the amount of tax that is due is based on your combined self-employed income and employed income. Speaking with an accountant who can guide you through this process may help.
How do I claim back side hustle tax?
Side hustle tax is the bugbear of entrepreneurs across the country, but the good news is that you can reduce the amount of tax that is due by claiming allowable expenses. HMRC’s list of allowable expenses can be deducted from your side hustle income, which means you are only taxed on your profits.
For example, if you are a freelance graphic designer who works from home, you may be able to claim a portion of your rent or mortgage, utilities, and office supplies as allowable side hustle expenses. This can help lower your taxable income and potentially result in a smaller tax bill at the end of the year.
Allowable expenses for side hustles may include:
Website cost
Office Supplies
Marketing and advertising
For more information on expenses you can claim, it is always recommended that you speak to an accountant who can help you minimise any side hustle tax that might be due.
How much can you earn before paying side hustle tax?
If you have a side hustle in the UK, the great news is that you have a £1000 trading allowance. What this means is that if you are employed full-time and you earn up to £1000 from your side hustle per tax year (6th April–5th April), you do not need to declare this income to HMRC.
How do I pay my side hustle tax?
When you are paid by your employer, tax is automatically deducted from your salary when you are paid. However, when you need to pay your side hustle tax, you must first complete a self-assessment tax return, assuming that your income is above £1000, as I have previously mentioned.
The amount of side hustle tax you pay will depend on various factors, such as how much you earn from your side hustle, the amount of expenses you have, and whether you have any other income, for example, from employment.
How do I register for self-assessment in order to pay my side hustle tax?
Alternatively, you can speak to Ugo Tax, who can manage the whole process for you.
When do I have to pay my side hustle tax?
Let’s imagine you start your side hustle in October 2024, which falls within the tax year April 6 2024–April 5 2025. You must file your self-assessment tax return and pay your side hustle tax (if there is any tax to pay) by January 31st, 2026.
Do I need to keep records of my side hustle income and expenses?
Yes, keeping records is one of the most important things you can do when you start your side hustle. Keeping records will not only allow you to feel more organised but can also ensure that you claim all your expenses and reduce the amount of tax you pay.
This includes paperwork such as invoices, receipts for petrol or stationery, bank statements, and any other relevant documents.
Side hustle tax is complicated, and you may be feeling a little daunted by the whole process. However, with the right kind of planning, record-keeping, and understanding of what expenses you can claim, side hustle tax will not only be simpler, but you will also reduce your tax liability.
Disclaimer
We do not provide accounting, tax, business, or legal advice, and this article has been created for informational purposes only. You should consult your own professional tax advisors for advice and support.
ugoscootersblog.com 
The gig economy has given rise to a plethora of side hustles that have allowed people to take on a secondary income to supplement their pay or start a business they have always dreamed of.
However, with additional income comes a greater misunderstanding about side hustle tax and the responsibilities you have to manage the additional income and pay tax.
This article is designed to inform and enlighten individuals about side hustle tax on topics such as: what expenses can I claim from my side hustle, when do I need to pay my side hustle tax, and what happens if I don’t declare my side hustle income.
What’s the difference between a side hustle and a job?
The difference between a side hustle and a job is that a side hustle is work you do or a business you start while working for an employer. For example:
For side hustle inspiration and ways to make money on the side, this article may help: WAYS TO MAKE MONEY ON THE SIDE
What happens if I don’t declare my side hustle income to HMRC?
It is important to keep up with deadlines relating to your tax obligation since you can receive fines and interest charges from HMRC, which, if left, can very quickly escalate and increase daily.
Failure to submit your self-assessment tax return on time:
You can avoid these fees if you register for self-assessment today with an accountant.
Can HMRC find out about the income I have from my side hustle?
The bad news for anyone looking to avoid telling HMRC about the income they receive from their side hustle is that they should be cautious. Unfortunately, HMRC has various mechanisms in place to detect undeclared income, such as data matching and risk profiling.
Furthermore, the following companies now share information with HMRC about the people they have working for them and what income they have been receiving, so it is more important than ever to accurately report all sources of income to avoid facing financial and legal repercussions.
Can I get help with my side hustle taxes?
Side hustle tax can be a little confusing, so it is strongly advised to speak to an accountantwho can help you navigate this stressful, paperwork-heavy downside to side hustles.
While there is a cost associated with this kind of support, the benefit will not only reduce your stress levels but also help to minimise any side hustle tax that might be due, as well as ensure you file the correct paper on time and avoid any nasty penalties or fines.
How does my side hustle income affect my main job tax?
It is important to be aware that your side hustle income could push you into a higher tax bracket, which may result in you paying more tax. The reason for this is that the amount of tax that is due is based on your combined self-employed income and employed income. Speaking with an accountant who can guide you through this process may help.
How do I claim back side hustle tax?
Side hustle tax is the bugbear of entrepreneurs across the country, but the good news is that you can reduce the amount of tax that is due by claiming allowable expenses. HMRC’s list of allowable expenses can be deducted from your side hustle income, which means you are only taxed on your profits.
For example, if you are a freelance graphic designer who works from home, you may be able to claim a portion of your rent or mortgage, utilities, and office supplies as allowable side hustle expenses. This can help lower your taxable income and potentially result in a smaller tax bill at the end of the year.
Allowable expenses for side hustles may include:
For more information on expenses you can claim, it is always recommended that you speak to an accountant who can help you minimise any side hustle tax that might be due.
How much can you earn before paying side hustle tax?
If you have a side hustle in the UK, the great news is that you have a £1000 trading allowance. What this means is that if you are employed full-time and you earn up to £1000 from your side hustle per tax year (6th April–5th April), you do not need to declare this income to HMRC.
How do I pay my side hustle tax?
When you are paid by your employer, tax is automatically deducted from your salary when you are paid. However, when you need to pay your side hustle tax, you must first complete a self-assessment tax return, assuming that your income is above £1000, as I have previously mentioned.
The amount of side hustle tax you pay will depend on various factors, such as how much you earn from your side hustle, the amount of expenses you have, and whether you have any other income, for example, from employment.
How do I register for self-assessment in order to pay my side hustle tax?
Alternatively, you can speak to Ugo Tax, who can manage the whole process for you.
When do I have to pay my side hustle tax?
Let’s imagine you start your side hustle in October 2024, which falls within the tax year April 6 2024–April 5 2025. You must file your self-assessment tax return and pay your side hustle tax (if there is any tax to pay) by January 31st, 2026.
Do I need to keep records of my side hustle income and expenses?
Yes, keeping records is one of the most important things you can do when you start your side hustle. Keeping records will not only allow you to feel more organised but can also ensure that you claim all your expenses and reduce the amount of tax you pay.
This includes paperwork such as invoices, receipts for petrol or stationery, bank statements, and any other relevant documents.
Side hustle tax is complicated, and you may be feeling a little daunted by the whole process. However, with the right kind of planning, record-keeping, and understanding of what expenses you can claim, side hustle tax will not only be simpler, but you will also reduce your tax liability.
Disclaimer
We do not provide accounting, tax, business, or legal advice, and this article has been created for informational purposes only. You should consult your own professional tax advisors for advice and support.
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