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If you have a second income or have a side-hustle from home, such as working to supplement a state pension, then there are some legal hoops that you need to jump through. There could still be tax to pay on it, so you need to make sure that you are registered for the work from home income and are declaring it in the proper way.
As a self-employed sole trader, you can earn a certain amount of money per year before you need to declare it, although this is still quite a low amount of money, usually £1000. If you are earning over that in your side income, then you need to be registered and need to be keeping records, files, receipts, and paying the right amount of tax, if applicable. Otherwise, you could get implicated in tax avoidance which can lead to some hefty fines; not what you want to have to encounter.
If you want some help and advice, especially if you have never had to do a tax return, then getting in touch with an accountant much like http://xperion.com.au/ can be a good idea. Then at least you will be doing all that you can to keep things legal and correct, even if you don’t need to use an accountant all the time.
What constitutes additional income?
If you have an alternative stream of income or have an income that you earn from home, rather than through an employer, then it will class as having an additional income. The relevant amount of tax needs to be paid on additional income, which will be done yearly through a tax return. According to https://www.moneydonut.co.uk/ additional income can include:
- Freelance or contract work, which is done without an employer
- State pension
- Any interest that you get on your savings. Of course, this will need to be a large amount to have enough to make paying tax on it eligible
- Income from a rental property
- Any money from investments, such as dividends. There is a certain tax-free amount, but it is worth speaking to an accountant about that if you have a lot of investments
- Selling items on a regular basis, even if they are your belongings, that exceed the amount you can earn before paying tax.
Being able to supplement your income or your pension can be such a good thing. Not only can it help you to have something else to work on and a way to spend your time, but it can be a good thing for your finances. Sometimes your income or your savings just aren’t enough to give you all that you need. Emergencies come up from time to time or you might just want to take that trip of a lifetime! Just make sure that you are registered for this second income and are doing it all legally and paying what tax is due if any. It can be a pain to organise it all but will definitely be worth it.
