Are things looking up for our moolah? Recent stats might suggest so.
Average earnings actually rose by 2.8 per cent in the year to February. This was unchanged on the previous month and the highest since September 2015, according to the Office for National Statistics.
It also seems enthusiasm for the self-employed life is cooling. The numbers of people going freelance actually fell for the second quarter in a row, down by 18,000 to 4.76 million people.
So are young workers falling back in love with their bosses, and walking home from the office with a spring in their step? I’m not so sure.
This generation is still disproportionately scarred by the financial crisis. British workers under 30 have seen a 13 per cent real fall in their pay since the crash. We are beaten only by Greece, where earnings have fallen by 25 per cent. According to the Resolution Foundation, the drop for the under 30s was twice as big as the squeeze faced by those in their 50s – a bigger age divide than in any other country.
No wonder that many young people are turning to side hustles in a bid to top up their income. According to research by financial site Finder, more than a quarter of millennials in the UK earn extra money outside their normal job without declaring it to the taxman. Naughty!
Among the most popular jobs are freelance creative work, driving, labour, cleaning and “advice” (whatever that means!) But of course, some of these moneymaking wheezes aren’t so casual. Some young workers are creating big businesses in their spare time, becoming “intrapreneurs” with a dual existence. Take Paul and Kirsty Tanner.
Paul is Head Of Furniture for M&S and Kirsty is Creative Director for Soho House. But the two also run their a watch brand, FTE (Freedom to Exist) on the side. It’s just the two of them behind the business – they created the website, found the funding, took the photos and even modelled the rather natty watches themselves. Paul says:
“Leading a two-job existence is increasingly becoming the norm for entrepreneurs looking to get a new business off the ground. Our diverse skillset has enabled us to run every single aspect of FTE ourselves.
Sales of our debut “30 Edition” watch were so strong that we quickly launched a Kickstarter campaign, which we successfully funded and allowed us to add a larger Unisex 40 Edition. The expansive online platform has enabled us to amass our international customer base much faster than would have been expected in the watch industry just a few years ago.”
Paul and Kirsty are not the only ones who are dreaming big. A New York Times bestselling book, named The Side Hustle, aims to teach readers how to start their own side business in just 27 days. Forbes regularly celebrates the achievements of side hustlers who’ve made millions, listing “easy” ways to make a quick buck on the side.
But what gives the side hustle movement a bad name is the one-upmanship and tax pitfalls involved.
Firstly, you really aren’t an inferior human being if you’re relying solely on Job A to bring home the bacon. Frankly, some side hustle folks can be UNBEARABLY smug, overly-competitive and even morally dubious. Take blogging. An activity that should be about creative freedom and the exchange of ideas has become – for many hustlers – a blatant moneymaking exercise. Simply take the advertisers’ cash, stuff your blog with crap and to hell with the readers – it’s all about you and your bottom line.
And many people are quite happy to keep their side hustles minimal. A few items on Etsy here, a couple of dog walks there…
You really don’t have to come up with a £100 million business idea to get involved. And you have nothing to worry about if you’re doing occasional odd jobs or running a tiny cottage business when it comes to tax.
As of April 2017, you are allowed to keep your earnings worth under £1000 on the side, tax-free. And you don’t even have to let the taxman know.
But there are some important caveats. The trading allowance doesn’t just cover your profits – it includes turnover too. So if your materials cost £200, you can only take £800 in profits tax-free.
As soon as your business hits the £1000 mark, everything changes. Even if your turnover was £1,001, you would have to tell HMRC via a tax return. The tax office would then deduct expenses (in this case £200) and charge tax on the profit. So you’d pay tax on £801.
Finder estimates that around 5.7 million people flirt with legal and financial danger by failing to declare their side earnings. And its millennials who are most likely to push the envelope.
Does this affect me? If your combined earnings (from your full-time employment and any other work) exceed your personal allowance, yep. How do you figure out your PA? Behold the table below!
|Band||Taxable income||Tax rate|
|Personal allowance (for most people)||Up to £11,850||0%|
|Bog standard (basic rate taxpayer)||£11,851 to £46,350||20%|
|Movin’ on up (higher rate taxpayer)||£46,351 to £150,000||40%|
|LOADSA MONEY (aka additional rate)||over £150,000||45%|
So say you’re on a salary of £25k. If the profits from your side hustle were £10k, you’re looking at £35k earnings.
Whip off the personal allowance and you’re left with £23,150. So you’ll have to pay 20% tax, which is £4630.
If your earnings went past the basic rate tax band, you’d have to pay the higher rate on that chunk. So if you had total earnings of £60,000 for example, you would deduct the personal allowance to get £48,150.
That means you would pay 20% on your earnings up to £46,350 (£9270) and then 40% on the extra bit up to £48,150 (i.e. £1,800). The tax on this slice would be £720.
What about deadlines? Well, it’s a legal requirement to register with HMRC by October. Here’s the form.
Can I get away with not declaring? Like eating raw chicken and seeing Transformers films back-to-back, this would be a bad idea.
Brian Palmer from the Association of Accounting Technicians explains why.
“Firstly, it is socially irresponsible not to – if you do not pay your taxes government services like the NHS, education, people in need of benefits and services we all need like law and order will not get the money they need. Apart from the moral case, the risks are the same for non-declaration of as any other form of income – you risk a visit from the taxman.
There is a statutory requirement to notify HMRC of any new sources of taxable income by 6 October following the end of the tax year concerned, which can be done through the government’s website.
Being on the end of an in-depth enquiry is something that no one likes – it’s stressful, expensive and has an unpleasant outcome in the shape of penalties and interest on any previously undisclosed income. If a person is a regular offender or fails to make a full and honest disclosure from the outset on enquiry they can face criminal proceedings and even a jail sentence.”
Glad we got that cleared up.
Okay, so you’re not an arsty fartsy “creative” or budding business tycoon. But you’re up for earning extra cash. So how do you know which side hustles are golden tickets and which ones are lost causes?
The Young Money Blog has weighed up the most common side hustles in terms of convenience, kerching potential and fun. We’ve given each consideration a score out of 5. So which side hustle will earn the coveted Young Money crown? Find out!
Party host or product consultant
Brands like the Body Shop, Ann Summers and Neals Yard Remedies offer at-home parties. If you want to get your mates round, try some new products and nab some freebies/discounts, I can think of worse ways to spend an evening. Having attended a couple, I can say they are a lot of fun, with no obligation to buy products (although you will inevitably end up treating yourself to something…)
But you’ll have to become a consultant to start earning money outright. You then take product parties to people’s homes, help run the evening and take commission on any products sold. You will have to be trained and buy a starter kit. The Body Shop kit is £45, the Ann Summers kit costs £49 and the Neals Yard option will set you back £95. The amount you earn per party really depends on how many products you sell, but £50 is the average. But if you do your job REALLY well, you may well end up earning more.
VERDICT: Being a party host isn’t really a side hustle, but being a consultant has its upsides. It suits people with strong sales skills (not to mention a wide social network) plus you can plan the evenings to suit your schedule. But you need to make enough to justify the starter costs and the earnings aren’t huge. PLEASE NOTE: there are many dodgy sales schemes out there that require you to flog iffy products AND pay big upfront fees. Avoid at all costs – I have mentioned the three above as they are reputable brands.
KERCHING POTENTIAL: 1/5
Life and commercial modelling
You don’t need a Hadid-esque body to become a life model. Anyone can whip their kit off and pose for painters at a local art class. Although the idea is the stuff of nightmares for some people, participants say it does wonders for their body confidence (and gives them a nice earner for very little effort).
You can contact local arts colleges and community centres but a more focused approach is to sign up with the Register of Artists’ Models. You pay £38.50 a year to be on their books – artists use the register to find the right model for them. The typical rate is £15 an hour (although a full day might earn you £120).
I can’t testify to the benefits of life modelling first hand. However, I have done modelling with my clothes on (!) and I can confirm it’s money for old rope. I occasionally do work with Broadcasting Agency and the pay has been ridiculously good (averaging between £200 and £1000, depending on the length of shoot and buy-out fees). But if you’re lucky enough to be cast in a high profile advert that pays royalties, you could earn tens of thousands. My most enjoyable jobs have been partying with the Made in Chelsea crew on a carousel in Battersea Park for their TV advert (though the “champagne” we sipped was actually fizzy juice) and pretending to be engaged to a bloke for photos that have appeared on the Natwest website.
If your hands and feet are in good nick, they can earn their keep too. Hand and foot modelling can earn you between £350 and £500 for print advertising, while TV work might net you between £850 and £1000. Body part modelling agencies include Hired Hands and BMA Models.
VERDICT: Realistically, this option is only for those with flexible diaries, as it often involves long shoots and sittings. These jobs can also be quite tedious, with lots of waiting around and maintaining poses or repeating actions for long periods. Depending on the work you do, personal maintenance is important (particularly for hand/foot modelling). You may have to attend castings in order to get work. If you are called up for a job, you have to be available at the times dictated to you so it won’t suit those with onerous jobs or big personal responsibilities. But the pay is terrific and you may be surprised at how in-demand you are, giving your ego AND finances a boost.
KERCHING POTENTIAL: 5/5
Sell old AND new stuff
Yea, yea, we all know about eBay. But there are some new games in town, particularly when it comes to selling old clothes. Shopify, Vinted, Preloved…even Instagram has become a potentially lucrative channel for selling your old gear, if you know how to photograph and market it well enough.
You can also do a bit of fashion touting if you have the patience and a distinct lack of scruples, thanks to a new trend called retail arbitrage. A whole online community of traders has sprung up to buy limited edition clothes from the hottest brands on the day they launch – “the drop”. They then list the items on millennial-friendly auction apps like Depop at a mark-up. I don’t see how this is any different to ticket touting, but there you go.
You can also use eBay marketplace or Amazon Fulfilment, which stores your products, dispatches them and handles returns (but again, only for those who feel comfortable dealing with one of the most exploitative and voracious companies in the known universe).
Selling old and new stuff usually incurs costs. On eBay, you’re allowed to list 20 items per month free of charge, after which you’ll pay 35p per item. You’ll also pay extra charges for listing in two categories or having more than one photo per listing and eBay takes 10% as standard for every sale. If you use Paypal, it’ll take 3.4 per cent of the sale price and charge 20p per transcation. Ecal is a handy little tool which works out how much you’ll pay for each sale, based on what you list it for and how much it sells for eventually.
eBay is the Big Daddy of the online selling world, but other marketplaces have their advantages. Vinted, for instance, has no sellers fee (it’s passed onto the buyer instead) and Debop has more enthusiastic buyers for certain brands with similar fees to eBay. This whole field warrants its own blog – I’ll come back it in due course.
VERDICT: Retail arbitrage strikes me as pretty time-consuming with no guarantee of a lucrative outcome (indeed, Asia-based sellers are starting to flood the market, accepting tiny profit margins that aren’t viable for UK arbitragers). So if you want to stick to old-fashioned re-selling, it’s worth doing your homework to make sure you have items worth selling at a price that will justify the costs involved – but most importantly, on the most appropriate platform. Yeezy trainers will do better on Debop while vintage items could get more attention on Etsy or Instagram. You also have to be organised, making sure you photograph products well and dispatch products swiftly. But you can fit reselling around your schedule, you can have some fun rooting out potential sales items (either in the back of the wardrobe or down your local charity shop) and it’s a pretty effective way to profit from decluttering.
KERCHING POTENTIAL: 4/5
Focus groups often fly under the radar as a way to make money on the side. Companies are always on the lookout for members of the public to take part in feedback sessions, research projects and one-to-one interviews. They can take place in person, over the phone or even online.
The main companies that recruit people for these opportunities are People for Research, Take Part on Research, Paid Focus Group and Focus Groups UK (catchy names, huh!) You can expect to earn anywhere between £25 and £350.
VERDICT: Focus groups aren’t an instant cash fix. You have to wait to be selected for a focus group and then make yourself available for as long as the project requires. Some won’t take up too much of your time but you may need to be more flexible to make the most of more lucrative focus group opportunities. But you’re getting paid to meet new people, have an interesting natter, share your views and eat some biscuits. Sounds good to me.
KERCHING POTENTIAL: 3/5
If you’ve ever been told what a lovely or unusual voice you have, you can start taking advantage of it. Selling voiceovers from home has never been easier thanks to the internet and increasingly sophisticated home microphones. You don’t need an agent or a big name to get work, but undoubtedly the most lucrative voiceover work is reserved for stars of stage and screen (the vagaries of which are most memorably depicted by Matt Berry in his brilliant show Toast). Work includes adverts, audio books, cartoons and even call centre phone options or travel announcements.
Voices.com is good place to start because it’s well-respected, with 125,000 clients and 4,000 new jobs posted per month. You can post your first clip soon after creating an account. If you get a free basic guest membership, you can apply for jobs but only if you’re invited by a client. If you want to find and apply for jobs, a Premium Lite membership costs £37 a month or £300 a year. Voices.com says you can expect to earn around £70 for a 15 second recording, £180 for a 30 or 60 second advert to about £2000 per audiobook.
You have to produce a voiceover reel in order to attract work. This means demonstrating different vocal styles and accents to show off your range. Some people who take this side hustle seriously will pay voiceover specialists to improve their reels but you can do it yourself if you’ve got the equipment and edit the reel together using free software like Audacity.
VERDICT: Again, no guarantees with this one and there is an initial investment involved if you don’t already have a decent microphone (£120 being the standard price for one that will plug directly into your computer). You may also have to invest in other equipment, like a mini sound booth and pop shield for your mic. The money is very good but the voiceover market is a crowded one, and you’ll be surprised at the skills and effort required. Having done voiceovers for radio myself, it is harder than it looks!
KERCHING POTENTIAL: 4/5
Sell your skills
When it comes to selling your skills online…where do I even begin? You can create teaching courses, conduct Skype lessons or hire out your services – in almost any field you can imagine. The number of websites allowing you to sell your expertise is vast, so we will return to this subject again. But it’s worth checking out my previous in-depth guide on how to make money from teaching online.
As for freelance sites, the trick is to find one that caters to your specialism. As a financial writer, I signed up to Journalism.co.uk a few years ago and very quickly made back my annual listing fee (£60). I have since earned hundreds of pounds from jobs like reporting from the Kensington constituency for the last election (which attracted hundreds of thousands of views of my Twitter feed in just a few hours).
But this is the exception that proves the rule. I have decided to steer clear of most freelance sites for various reasons. For starters, the biggest names (Upwork, PeoplePerHour) trigger a race to the bottom, as you’re forced to compete with cheap labour in other countries. You often have to contend with high fees too, although the percentage rates come down as you do more work with clients. Peopleperhour charges a 20% fee + 18% VAT so on a job worth £100, you would only be taking home £76. That’s before you’ve taken Paypal’s fees into account. Upwork’s fee is similar (20% on the first £365 in turnover with a single client).
Even with lower percentage rates of 10 and 5 per cent on work valued at higher amounts, that is a HUGE chunk coming out of your earnings. To put these rates in a wider context, the investment industry gets an extremely bad rep for funds charging over 1 per cent!
There has also been an explosion in fraudulent activity on sites like Upwork. Crooks have posed as legitimate clients to commission thousands of pounds worth of work and disappear before payment is due. Upwork says it is trying to tackle the problem, but their verification system still seems to be letting criminal activity slip through the cracks.
I haven’t fallen foul of this per se but I have had my time wasted by potential commissioners who ghost you. Freelance journalism involves a lot of a speculative pitching and you may not even get an answer, let alone a commission, if you offer an idea. That’s one reason why the percentage of pitching that I do has fallen dramatically as my other income streams have taken off in recent times. But a few years ago, I signed up briefly for a specialist case study website where newspaper editors post requests for tricky case studies that were crucial to get certain stories published. I was rather dismayed that editors didn’t even respond to offers of case studies that you had carefully sourced for their consideration (it’s not easy to persuade people to take about sensitive or controversial issues in national newspapers, even if you’re paying them). I just didn’t have the time to waste on such fruitless tasks. And neither do you!
My advice would be to cut out the middle man wherever possible and market yourself directly to potential clients. That means building, pimping and promoting your website, as well as networking your butt off. When you land a project, make sure you and the client are both clear on expectations, deadlines and costs. Work hard to deliver the goods on time.
VERDICT: This is my favourite (yes, I know I’m biased)! It’s flexible, convenient work that plays to your individual strengths. You can dial it up or down depending on your lifestyle and ambitions. And yes, you CAN market and sell your services directly to clients. All you need is a wicked website, in-demand skills, marketing flair and self-discipline. You don’t have to be a world expert or in a field of one to succeed. Many part-time freelancers have developed their know-how over time from online tutorials, books and experience. Go forth and conquer!
KERCHING POTENTIAL: 5/5