Are Side Hustles Legal? What You Need to Know

TL;DR: Are Side Hustles Legal?

Yes, side hustles are legal in the UK and many other places, as long as you follow specific rules. These include declaring any income, adhering to regulations for certain professions, and respecting the terms of your main employment. In this guide, we’ll cover everything you need to know about the legality of side hustles.

Are Side Hustles Legal?

Wondering if it’s okay to earn extra money on the side? The good news is that side hustles are generally legal in the UK. However, there are some guidelines to follow to ensure you stay on the right side of the law.

Key Considerations to Keep Your Side Hustle Legal

1. Declaring Your Income

In the UK, HMRC requires you to report all income, including money earned from side hustles. If your side hustle brings in over £1,000 a year, you’ll need to report it through Self-Assessment. This applies to any income, whether it’s from freelancing, selling products, or offering services.

  • Thresholds Matter: You don’t need to declare if you make £1,000 or less in a tax year, thanks to the Trading Allowance.
  • Self-Assessment: If you earn more than this amount, you’ll need to file a Self-Assessment tax return each year.
2. Respecting Your Main Job’s Contract

If you’re employed full-time, your contract may include terms about taking on additional work. Some employers don’t allow outside work or require you to get approval first. It’s crucial to check this to avoid issues with your main job.

  • No-Compete Clauses: Some contracts have clauses that restrict employees from working in the same industry on the side.
  • Conflict of Interest: If your side hustle could be seen as competing with your employer, it’s best to get written permission.
3. Follow Industry Regulations

Certain side hustle industries have specific regulations. For example, if you want to work as a freelance electrician, plumber, or childminder, you’ll need the relevant qualifications and licenses.

  • Professional Licenses: Trades such as electricians or healthcare services require specific qualifications.
  • Permits for Certain Services: Some services, like food preparation, need to meet local health and safety requirements.

Common Legal Pitfalls to Avoid

1. Not Reporting Income

Failing to report side hustle income is one of the biggest mistakes people make. HMRC monitors income and has methods to track unreported earnings. Not declaring income can lead to fines and back taxes.

2. Ignoring Insurance Needs

Some side hustles, like renting out property or offering childcare, require insurance. Without proper coverage, you could face legal or financial consequences if something goes wrong.

  • Public Liability Insurance: Essential for side hustles that involve public interaction or client visits.
  • Professional Indemnity Insurance: Important if you offer advice or professional services, like consulting.
3. Overlooking Health and Safety

If you’re running a side hustle from home, such as a catering service, you may need to meet health and safety standards. Ignoring these can result in fines and even legal action.

Tips for Running a Legal Side Hustle

  • Keep Accurate Records: Track all income and expenses related to your side hustle. This will make tax filing easier and help if you’re audited.
  • Know Your Tax Deadlines: Register for Self-Assessment and file on time to avoid penalties.
  • Check Your Main Employment Contract: Make sure your side hustle won’t conflict with your primary job.
  • Get Necessary Permits or Licenses: If your side hustle involves regulated work, ensure you’re properly qualified and licensed.
  • Consider Business Insurance: Protect yourself and your side hustle with adequate insurance.

Final Thoughts: Are Side Hustles Legal?

In most cases, side hustles are legal in the UK as long as you declare your earnings, respect employment contracts, and follow any industry-specific regulations. By understanding these rules, you can run a profitable and worry-free side hustle.