Side hustle warning for anyone making extra cash – what to do now to avoid big bill

ANYONE making extra cash outside their day job could face a big bill unless they act soon.

More and more people are turning to side hustles to boost their income or turn their hobby into a lucrative career.

But many may not be aware they could owe cash to the taxman.

When you're employed the company you work for takes the tax from your earnings and pays HMRC so you don't have to.

But anyone earning extra cash, for example from selling things online or dog walking, may have to do it themselves.

If you earn more than £1,000 extra a year, you’ll need to pay tax on your earnings. 

Sarah Coles, personal finance expert at Hargreaves Lansdown, told The Sun: "The good news is that if you make £1,000 or less from your side hustle in any one tax year, you can take advantage of a special tax-free trading allowance from the taxman.

"That means you don’t need to submit a tax return for this income, and you don’t have to pay any tax."

But anyone earning over that amount should be reporting their income to HMRC.

To do this they need to file a self assessment tax return - and there are some key deadlines to be aware of.

Sarah said: "If you make over £1,000 you will need to register as being self employed for this bit of your income.

"Don’t worry, in the weird world of the taxman you can be employed and self-employed at the same time.

"It just means when you do your tax return you need to put information from your employer in there alongside information about your side hustle."

You can decide not to use the allowance and instead deduct expenses you incur, and then pay tax on the remaining profit.