Consumer Corner: Side hustling — making extra money and what you need to consider

Earning extra money is great, but what are the implications with taxes and Revenue?

If you're looking for a side hustle, consider your skills and how you could use them.

With rising prices all around us, there’s a new trend in town. That of the ‘side hustle’. The practice of making extra money doing something outside your regular nine to five. 

Finding a side hustle can be anything from giving grinds to becoming an influencer to childminding, baking cakes, dog walking, coaching tennis or consulting. It’s using your skills and putting them to use or using assets like your house and renting a room or your driveway.

To find a side hustle, consider your skills and how you could use them and use your network to let people know you’d be interested in extra work. Also, doing a course could help you upskill to make money in the future.

However, earning extra money is very well but what are the implications with taxes and Revenue? Many people will be PAYE workers and won’t have to worry about calculating the tax on earnings but once you start to earn the additional income, you may have to start considering the tax implications.

Marian Ryan, Consumer Tax Manager with Taxback.com said that if you are planning to earn some extra cash, depending on your PAYE income, more than half of it could well be going straight to the taxman.

Ms Ryan said that if you earn less than €36,800 in PAYE income then you will pay 20% income tax, but further income could raise your earnings to the point where you enter the higher rate tax bracket and, as such, will see you paying income tax at 40%. You’ll also pay USC at a rate ranging from 0.5% to 8%, depending on the extent of your extra earnings.

If you make more than €5,000 in additional earnings then you are required to file a tax return using Form 11 by the self-assessed tax file deadline.

“Non-PAYE income is any income that someone earns outside of employment that their employer does not deduct PAYE, USC and PRSI at source for them. This can be anything from rental income, sole trader income, shares, dividends, Airbnb income. This list here is endless but basically, any income outside of employment is considered to be non-PAYE income,” said Ms Ryan.

All income is taxable and we are all liable to pay tax on every cent and euro we earn. However, how it is taxed varies, as Ms Ryan points out.

“When you have non-PAYE income you would be what is called a 'chargeable person’ and that means you need to file an income tax return by the 31st of October each year to declare all of the income that you had in the previous year, the relevant expenses you had related to that income and pay the PAYE, PRSI and USC due on that income. If you do not pay and file your taxes due there are various penalties in place.” 

If the return is filed and the tax bill paid within two months of the deadline, a 5% surcharge will be added to the tax bill, this increases to 10% if it is any later than two months past the deadline.

The good news is that there are tax reliefs available on your extra income. "There is an almost endless list of different tax credits and expenses that people can claim.” 

Also, there are a huge number of personal reliefs that everyone would be entitled to such as tax credits, medical expenses, and working from home credits.