When exploring various side hustles and ways to make extra money it can be easy to forget that a lot of ways of earning money on the side are sadly not exempt from taxes. Having to shell out some of your hard earned money for tax is really painful. Luckily, I have some fantastic, profitable ways to earn a tax free income.
What is my tax free income UK?
Your tax free Personal Allowance in the UK is £12,570.
This means that you can earn £12,570 per tax year before you have to pay any income tax.
This amount might be higher if you claim Marriage Allowance or Blind Person’s Allowance, and it is smaller if you earn over £100,000/
Do I have to pay tax on a side hustle?
Many people are put off from starting a side hustle because they are worried about paying tax. If you’ve been wondering ‘do I have to pay tax on a side hustle?’ then in this post we are going to help you to navigate getting a tax free income from your side hustling.
How are side hustles taxed?
Wondering how side hustles are taxed?
The answer is…it varies.
How side hustles are taxed will depend on whether you have another job paying you via PAYE, as well as other income you receive
Generally speaking, everyone has a £1,000 Trading Allowance per tax year (April to April) allowing them to earn £1,000 gross (that’s the total, NOT the total minus your expenses) without paying tax.
Tax-free side hustles in the UK – Matched Betting
Matched betting will always be one of my top favourite side hustles and the best thing about it is that it is tax-free!
Matched betting is a way to utilise bookmakers’ offers to turn a profit, and because gambling winnings aren’t taxed in the UK, everything you make is tax free.
It can be really lucrative too – I made over £12,000 in my first 12 months.
Selling your own unwanted clothes/products is one of the tax-free side hustles UK
I’m willing to bet you have more clothes than you think that are just not going to be worn again that are in great condition. Rather than letting them collect dust and take up valuable wardrobe space, you could choose to sell them on eBay or sell on Vinted.
Decluttering and selling on eBay extends to all of your house too.
Did you know that old VHS players regularly fetch £20-£40 on eBay?
Empty make up boxes and perfume bottles also sell on eBay.
As long as you are selling your old unwanted items and not items you have purchased to resell, you don’t pay tax on the money you earn from sales.
Related posts:
- Easy things you can sell around your home to make money
- Where to get eBay packaging from
- 17 tried and tested eBay tips
Rent out a spare room for tax free income
If you have a spare room in your house, you can sign up to Rent-a-Room and earn up to £7,500 per year tax-free.
You don’t even have to be a homeowner either to take advantage of this. If you’re renting you can also lease out a room to a lodger, as long as your own lease allows you to do so.
You will need to prepare the room for taking in a lodger so that you can attract the right lodger at a fair price.
For more info on the Rent-A-Room scheme click here.
Earn cashback as tax-free side hustles UK
Cashback is free cash, so who would say no to that?
I’ve earned over £4,375 from Quidco alone!
Cashback websites are paid a commission from retailers for sending customers to them, and in order to entice you to click through their affiliate links they offer you a percentage of that commission.
I use Quidco, TopCashback, Jam Doughnut, Widilo and Rakuten for my cashback, and this is tax free income.
Earn £1,000 tax free
If other side hustles entice you, like anything from my 100 legitimate ways to make money post, then you will be pleased to know that you are allowed to earn £1,000 per tax year without paying any tax on it.
Here is what you need to do when you need to declare extra income to HMRC.
Do I have to pay tax on bank switching incentives?
Bank switching is really popular, and you can earn hundreds of pounds from just switching one bank account.
The good news is that the incentives that you are paid for switching are NOT taxable according to HMRC.
However, if you earn money from referring your friends then this would be taxable income if it is over your Personal Allowance and Trading Allowance.
One Response
I’ve always wanted to rent out a spare bedroom at our home, but I wonder about weirdos with our two younger kids. I do like to make a fair amount reselling on eBay though 🙂