Many people are starting side hustles to pursue a passion, supplement the main household income, or build a safety net.
However, while the appeal of having extra money coming in can be attractive, starting a side hustle comes with challenges and considerations. Before starting your own, take the time to weigh up the pros and cons.
Why set up a side hustle?
The concept of a side hustle has become increasingly popular recently. According to recent stats, in 2024, 43% of Brits have a side hustle as an additional source of income. On average, these enterprises are making people around £900 per month.
This extra revenue can be attractive. We’ve seen significant economic changes in the last few years. From the fallout of the pandemic to the rising cost of living, many people in the UK have been trying to get a clearer picture of their finances.
Rejigging budgets and reconsidering the weekly food shop can be hugely beneficial. But by adding a side hustle where you can, you can have extra funds in your bank account, often by monetising a hobby you’re doing anyway. You might want to sell the things you make in your spare room or provide proofreading services. Things you’ve done as a favour before, such as DIY jobs, could become projects you decide to charge for.
The pros and cons of a side hustle
You must look at the positives and negatives that come with a side hustle:
Pros
- Income: A side hustle can provide a valuable additional income stream, which can help pay off debts, save for future goals, or improve your overall financial stability.
- Skill-building: You can develop your passion or introduce new skills that might not be possible in your main job.
- Career-changing: A successful side hustle can potentially grow into a full-time business, offering greater autonomy and job satisfaction.
Cons
- Time-consuming: Balancing a side hustle with a full-time job can take up your spare time. If you’re already working in a full-time role or a demanding job, you could find that adding another job can mean you have no time left for yourself.
- Personal relationships: If your side hustle eats into your personal time, it can affect your relationships with loved ones.
- Mental load: Losing your free time might also cause stress and lead to burnout if not managed properly.
- Expensive: The financial investment required to start and maintain a side hustle can be significant, and there is always a risk that the venture might not be profitable.
Taxes and paperwork
You’ll also need to consider the tax implications. Any income earned from a side hustle must be reported to HM Revenue and Customs (HMRC) in the UK. You may need to register for Self Assessment and file an annual tax return detailing your additional income. You might also have to pay National Insurance contributions depending on your earnings.
It’s essential to keep accurate records of all your side hustle income and expenses to calculate your tax liability and claim any allowable deductions correctly. Consulting with a tax advisor or accountant can be beneficial, especially if you’re unfamiliar with the tax regulations related to self-employment.
Should you fail to comply with tax obligations, you could face penalties and interest charges, so you’ll need to keep up with tax requirements.
Your main job
Evaluating how your side hustle might impact your main job is important. Your primary employment is likely your main source of income, so your side hustle shouldn’t interfere with your responsibilities or performance at your main job. This includes managing your time effectively to avoid conflicts.
It also means ensuring you don’t violate any employment contract terms. Some employers have specific policies regarding secondary employment, and you might have to disclose your side hustle or get permission before starting.
You’ll also need to avoid potential conflicts of interest, where your side hustle could compete with or undermine your employer’s business. Separate your main job and side hustle so you can have boundaries in place.
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