How should tax be paid on this side hustle?

[mburdett555]

As a full time employee I am paying national insurance and tax deducted from my salary.

I am putting £150 approx per month into a separate bank account which comes from a passive income. AdSense revenue, Stripe payouts.
Then out of that account comes my expenses like website server costs, Google business apps etc. whatevers left could be considered profits, although I don't use these for personal purchases only anything related to the side hustle.

It sounds like I need to register for a self assesment tax return, so presumably I will be expected to cough up my earnings some time after April 2026 assuming the profits exceed £1000 which at this rate, will.

Do I just cast aside anything related to employment and just pay tax on what I'm getting profit wise from this? How should I work out the tax, is it a percentage of the earnings? When I register for self assessment, what do I send in april, a full list of ongoing and outgoings like a bank statement?

I am very new to this. Not accounting minded but doing this simply because it's obviously a legal requirement for paying tax on earnings.
I don't want to register for something, they expect something in 2026 and because I haven't sent anything this year they send a penalty.

 

[DontAsk]

You will fill in a self assessment tax return with details of ALL income. You will enter what tax you have already paid through PAYE and it will calculate what additional tax you owe.

 

[Scalloway]

assuming the profits exceed £1000

It is turnover over £1,000 that needs to be reported, not profit.

what do I send in april, a full list of ongoing and outgoings like a bank statement

You produce that list to give you the figures but all that needs to appear on your self assessment is a total for income and expenses. Sofrtware will calculate the profit and tax due.

 

[Newchodge]

For earnings between 6 April 2025 and 5 April 2026 you have to 'cough up' by January 2027. By the same date you will probably also have to cough up half as much again as part payment of your liability to April 2027.

 

[mburdett555]

For earnings between 6 April 2025 and 5 April 2026 you have to 'cough up' by January 2027. By the same date you will probably also have to cough up half as much again as part payment of your liability to April 2027.

Hopefully the tax won't be too much. I remember doing over 40 hours a week and when I went to working overtime I ended up paying much greater amount of tax in contrast, to make working the extra time unviable financially. I'm hoping I'm not going to be expected to pay 50% or something silly like that.

 

[DWS]

Hopefully the tax won't be too much. I remember doing over 40 hours a week and when I went to working overtime I ended up paying much greater amount of tax in contrast, to make working the extra time unviable financially. I'm hoping I'm not going to be expected to pay 50% or something silly like that.

The rate of tax you will pay depends on your PAYE salary, it may be that your SE income pushes you into the higher rate threshold.

 

[MyAccountantOnline]

As a full time employee I am paying national insurance and tax deducted from my salary.

I am putting £150 approx per month into a separate bank account which comes from a passive income. AdSense revenue, Stripe payouts.
Then out of that account comes my expenses like website server costs, Google business apps etc. whatevers left could be considered profits, although I don't use these for personal purchases only anything related to the side hustle.

It sounds like I need to register for a self assesment tax return, so presumably I will be expected to cough up my earnings some time after April 2026 assuming the profits exceed £1000 which at this rate, will.

Do I just cast aside anything related to employment and just pay tax on what I'm getting profit wise from this? How should I work out the tax, is it a percentage of the earnings? When I register for self assessment, what do I send in april, a full list of ongoing and outgoings like a bank statement?

I am very new to this. Not accounting minded but doing this simply because it's obviously a legal requirement for paying tax on earnings.
I don't want to register for something, they expect something in 2026 and because I haven't sent anything this year they send a penalty.

You'll find lots of guidance which should help here https://www.gov.uk/government/collections/self-employment-detailed-information

If you are going to deal with your own taxes a good starting point is to have a separate bank account for your self employed income and expenses and look at getting some software to report the income to HMRC - have a read up on Making Tax Digital for Income Tax.

The tax you pay will depend on how much you earn as an employee. You may find this helpful https://www.gov.uk/understand-self-assessment-bill

 

[mburdett555]

I take my payments with Stripe, I think it sends me some sort of tax invoice every month but I haven't bothered to look at it in detail.

Due to the low turnover I haven't really looked at software to manage bookkeeping like Xero, but I'll take a look at the self assessment stuff and see how it goes.

 

[MyAccountantOnline]

You'll be able to automate/import Stripe transactions quite easily if you use some good software.

It may not yet apply but Making tax Digital will probably mean you'll have to keep digital records - another link for you here

You have lots of choice for bookkeeping software, Xero is one of many. FreeAgent is good and free if you have a business account with NatWest, Mettle, RBS or Ulster Bank.

 

[Scalloway]

I used VT Cashbook for my business. It is a free download but I see you need to pay if you get drawn into the MTD net.

VT Software

Accounting software for statutory accounts production and bookkeeping from VT Software

www.vtsoftware.co.uk

 

[mburdett555]

This page here says my tax band is 20%. My self employment profits will not push me in to a higher tax band.

gov.uk/income-tax-rates

Therefore can I assume to expect to pay 20% of my profits on my side business?

 

[Scalloway]

Therefore can I assume to expect to pay 20% of my profits on my side business?

Yes

 

[Ziggy2024]

This page here says my tax band is 20%. My self employment profits will not push me in to a higher tax band.

gov.uk/income-tax-rates

Therefore can I assume to expect to pay 20% of my profits on my side business?

Plus NIC when you exceed the relevant thresholds.
£6725 class 2
£12570 class 4