There is no doubt in the factor of productivity when you are earning extra by following the tendency of the side gigs, but be aware of the tax implications of side gigs that will come with it. Many people do not realise that the side gigs and the income stream are important to declare to HMRC because if you are unable to do it, you will be suffering from unwanted enquiries and visits from the HMRC. What you require to know about the side gigs and the relevant tax implications is part of the discussion further.
People are now interested in new and unique ways of making a better living for themselves, especially after the covid disaster which has affected human society globally. This has increased the tendency of taking freelancing work offers along with the main job to add to the existing income. Most people aim to follow this trend to make a better living and some other cases are doing this to pursue a dream or follow their passion. In the work circle of the UK, the new increasing tendency is known by the name of side gigs. However, there is something that you can not deny along with the benefits of the side gigs and that is the tax implications of side gigs.
AccountingFirms can assist you in managing your tax liabilities. Let’s talk to one of our professionals or tax advisor about the tax implications of side gigs.
Can you opt for side gigs with regular employment status?
When you’re in the status of normal employment, you still can opt for side gigs to earn more or to follow your passion and pursue a dream. Among the circle of UK workers, these side gigs have become a trend and increasingly popular to add a few more pounds to the income that is earned from the main job. Side gigs do not only support you to pursue your dream or passion but they help to add to your earnings and savings which sounds like a great idea.
You might be working as an admin member in the company for office hours, however, you have always been interested in twitch steaming and you use your spare hours to work on that. This is a way out to follow your passion and earn through it. Nothing can make you feel more rewarded and satisfied than this.
Tax and Side Gigs – what is the relation?
The major concern that you will have to consider about the income coming from the side gig is that it is completely untaxed. You will have to take the responsibility of getting it declared to the HMRC and confirm the exact amount so that the accurate tax bills are sent to you. This will further help you to meet the standard of the tax implications related to multiple income streams like side gigs.
When you are employed, you are associated with the PAYE system and the tax is already deducted before you receive your salary, this doesn’t make you liable for the declaration of income and getting it taxed. However, the case of side gigs makes you responsible because you are not associated with the PAYE system. You have paid the income tax and the national insurance before even you received your payment.
What if HMRC does not know my income streams?
If you are the person who is thinking of hiding the extra earned pounds from your side gigs, you are on the wrong side. Because once HMRC is aware of this income, you will have to deal with a hefty amount of fines and other financial penalties. You surely would not want to pay interest on the late tax payments. To avoid any of these unfavourable circumstances, you will have to declare your income from side gigs to the HMRC and fulfil your tax liabilities.
Moreover, in the UK there is a standard £1,000 allowance for additional income that is earned other than the main job. For people who are making an amount less than this will not have to declare their income to the HMRC. However, you are still liable to submit your self-assessment tax returns. It is better suggested to keep the evidence intact in form of bank statements, receipts, and invoices. Once HMRC is informed, they will consider your earnings from the main job and the side gigs to generate accurate tax bills for you to receive.
How much will I owe on my Tax Bill?
It totally depends on the amount of money that you are earning from the side gigs and the main job that will decide the figure of tax in your tax bills. How much income tax and national insurance you will have to pay is dependent on what is the earning figure from your multiple income streams. Sometimes your overall income from the main job and the side gigs will put you in the higher brackets of the tax. This makes you pay more tax than what you were paying before.
Moreover, if you aim to know the amount of tax that you will have to pay this year instantly, there are multiple options for online calculators to make your tax calculations. You will instantly get the results of your income tax and national insurance amount after using these online calculators.
The Bottom Line
Now that we have gathered a fair amount of information about the tax implications of side gigs, we can bring the discussion towards wrapping up. Side gigs are a great way of adding to your earnings, however, you will have to consider the tax implications as well. We hope these few minutes of reading have helped you to develop a better understanding.
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Disclaimer: All the information provided in this article on tax implications of side gigs, including all the texts and graphics, is general in nature. It does not intend to disregard any of the professional advice.