People are only just realising side hustle could land them with unexpected bill – how to avoid it

PEOPLE are only just realising that their side hustle could land them with an unexpected bill.

Many households have been left feeling strapped for cash and are searching for ways to boost their bank balance.

The good news is, there are plenty of simple ways to earn some additional income - but you need to know the rules.

Stephen Moor, head of employment at law firm Ashfords, said some people may not be aware that they could owe money to the taxman.

He said: "Caution should be taken if you're earning an additional income, as this is likely to be taxable.

"The side hustle could be treated as taxable trading income, which can include providing services or selling products."

When you're employed the company you work for takes the tax from your earnings and pays HMRC so you don't have to.

But anyone earning extra cash, for example from selling things online or dog walking, may have to do it themselves.

If you earn more than £1,000 extra a year, you’ll need to pay tax on your earnings. 

Stephen added: "You need to register for a self-assessment at HMRC to ensure you are paying the correct amount of tax.

"The applicable tax bands and the amount of tax you need to pay will depend on your income."

If you fail to file a tax return you could end up with a surprise bill from HMRC later on asking you to pay the tax you owe - plus extra fees on top.

Stephen said: "If you are late for filing a tax return, you could incur a penalty charge.

" Penalties can also be charged if you do not account properly for the full amount of tax you owe.