The most popular form of side hustle is selling handmade items, which accounts for 59 per cent of side hustles in the UK, according to research from 118 118 money. Meanwhile, of those with side hustles, 20 per cent earn their extra income through investing in crypto or traditional currencies, and 12 per cent top up their salaries by selling antiques or collectibles.
Why are side hustles becoming so common?
While many people who set up a side hustle do so out of love for their hobby or craft, a desire to change careers, or to fund a special project such as travelling abroad, many do so out of necessity to pay the bills.
Around 3.7 million people in the UK are struggling to get by despite being in work, new research has shown. Millions of Brits are falling short of the minimum income needed to live secure and stable lives, even if they are on universal credit or earn the national living wage.
The Joseph Rowntree Foundation’s annual Minimum Income Standard (MIS) report found single people working full-time on a living wage are still £3,000 short of an acceptable income to cover rent, food and other essential costs.
The government recently seemed to accidentally acknowledge the minimum wage is not enough to live on, as they put in place a legal requirement for hospitality venues to return all tips to staff – many of whom “rely on tipping to top up their income.”
The Labour party have committed to a £15 minimum wage in their manifesto for the next election, as debates continue over what constitutes enough to live on.
What could you earn from a side hustle?
On average, Britons with side hustles are making £411 a month from them, according to research by 118 118 Money.
And this list of potential earnings in each category shows just how much money there is to be made, though there’s no guarantee on any of them, of course.
Podcasting – £954 a month
Selling handmade candles – £670 a month
Renting out a flat/space – £657 a month
Blogging – £646 a month
Selling soft furnishings – £616 a month
Selling handmade clothing/accessories – £528 a month
Selling handmade soaps – £525 a month
Writing e-books – £517 a month
Selling handmade food/drink products – £485 a month
Investing – £451 a month
Self-employed or worker? Know what you’re entitled to
Some people have joined the gig economy as Uber/ private hire drivers, food delivery drivers or cleaners to make some extra money before or after their main job.
Gig economy workers have traditionally been classified as self-employed for employment law purposes, meaning they are ‘their own boss’ and do not receive benefits such as holiday or sick pay.
But in February 2021 the Supreme Court ruled that Uber drivers are workers and not self-employed, ending a four-year dispute which could have wide-ranging implications for the rights of people across the gig economy.
They are now entitled to holiday pay, a guaranteed minimum wage and other basic workers’ rights. They must also be paid for the time they spend on the app.
“As a worker, you have certain legal protections and benefits, such as the right to paid holiday and the right to receive the National Minimum Wage,” wrote The United Private Hire Drivers (UPHD) branch of the Independent Workers Union (IWGB) on Twitter.
Deliveroo drivers, on the other hand, are classed as self-employed, meaning they are not afforded the same rights.
So if you’re thinking of setting up a side hustle as a driver via an app, make sure you get what you’re entitled to.
If your employment status is unclear, check to see which of the three types of status you fit into. You can also contact the Acas helpline to get help figuring out your situation and how the law relates to it.
Registering as self-employed
New research suggests that more than a quarter of those with a second source of income are accidentally dodging tax, according to Online Money Adviser. This means that if you’re making extra money but failing to declare it to HMRC for tax purposes, you could be committing fraud.
Under the government’s Trading Allowance, you can earn up to £1,000 from your side hustle without needing to register with HMRC to declare it. You can simply pocket the cash.
However if you earn above £1,000, you need to let HMRC know you are earning money as a self-employed person within three months or you could face a £100 fine.
There are different ways of structuring your own business. You could be a sole trader, a limited company or a partnership. There’s information on the pros and cons of each option at gov.uk.
If your side hustle takes off, you may want to transition into being self-employed full time.