The rise of the side hustle
The cost of living crisis is prompting growing numbers to set up side hustles to boost their income, with over one in three people now running their own side business.
Over one in 10 (14%) expect to make over £5,000 each in additional income in the next year, according to research by small business insurer Simply Business, with more than half (54%) now earning up to 10% of their annual income from their side hustle.
Clare Framrose, head of savings at Atom Bank said: “With rising inflation and the current energy and fuel crises, the cost of living is proving increasingly limiting on people’s finances. Many will be finding that their wages aren’t going as far as they used to, so finding inventive ways to supplement your income is becoming more popular than ever.
“Having a second or third source of income is a great way to minimise the impact of inflation on your personal finances if you can, particularly if you find yourself struggling to save.”
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Popular side hustles include selling arts and crafts or clothing and textiles, home baking and cake making, offering hair and beauty services, tutoring, and providing copywriting or design services. Almost one in three Brits selling items online claims to have a side hustle, according to a poll of 3,000 adults commissioned by Royal Mail Parcel Collect, trading goods to the tune of £200 a month.
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Local services marketplace Airtasker says it has seen a 200% increase in sign-ups to its site over recent months, as people try to make ends meet by bringing in some extra cash. The site claims side hustlers can earn an average of up to £29,951 a year from offering their skills and services via the site. Many tasks can be done by anyone such as cleaning or deliveries, although lots of side hustlers offer services related to their specific skills and qualifications, such as electricians and plumbers. For example, according to Airtasker, carrying out three handyman tasks per week could earn you as much as £935 per month, whilst cake bakers can earn as much as £250 for making a special cake.
Top tips for running a successful side hustle
There are several ways to boost your chances of making your side hustle successful. Here’s what you need to know before you get started.
Check that your employer is happy for you to run a side hustle
Seven out of ten (72%) people who run a side hustle are currently employees of a company, according to SimplyBusiness. Before you start your side hustle, make sure you let your employer know your plans and check your contract allows you to have a second job.
Make it personal
People often prefer buying service or goods from someone they can actually see, so Airtasker recommends upload a photo of your face when advertising services. It says that taskers with a recognisable photo of their face are 10% more likely to be assigned tasks than those who don’t. It’s also worth uploading pictures of previous work if possible, so people can see how well you’ve carried out tasks previously.
Get your finances in order
Make sure you keep careful records of any income you earn from your side hustle, as you’ll usually need to declare this on a self-assessment tax return. You’re entitled to earn a certain amount of money without paying Income Tax each year, known as your Personal Allowance. This is is £12,570 in the current 2022/23 tax year, and it’s usually applied to the job which pays you the most. For example, if your main job pays £15,000 a year, and the you earn £5,000 from a side hustle, your personal allowance would be applied to your main job. This means you’d pay income tax at the basic rate of 20% on the £2,430 of your pay from your main job that’s above the allowance. You’d then also have to pay 20% income tax on the whole £5,000 from your second job.
It’s worth noting too that everyone has a £1,000 tax-free trading allowance in addition to their personal allowance, so you don’t need to tell HMRC about any income if it’s less than that in one tax year.
Keep your customers happy
Make sure you respond to any customer queries promptly and politely. Word of mouth recommendations are often one of the best ways to boost the amount of business you have coming in, so it’s vital to make a good impression.