With interest rates having risen for 13 consecutive months and wages not keeping up with inflation, the government has been urged to think creatively about supporting the growing number of people with side hustles – namely by raising the minimum trading allowance, from £1,000 to £3,000.
Tripling this allowance, which is the maximum amount an individual can earn via self-employment before tax is due on these earnings, would “give millions a financial lifeline”, says Julia Kermode, founder of IWORK, the body that champions self-employment and independent working.
IWORK’s recommendation comes as more of the UK’s population start side hustles to boost their income. Recent research carried out by recruitment agency, Aspire, supports this. A study of more than 900 workers suggests that the number of people considering side hustles or freelancing to cope with soaring costs has tripled in the past 12 months – from one in ten to one in three.
Added to this, the latest ONS Labour Market Statistics (July) also show that while UK wages have risen at a record annual pace (by 7.3% from March to May year-on-year), they still trail inflation (8.7%).
Julia Kermode, founder of IWORK said, “Millions of people are at breaking point. Interest rates climb month after month and there’s no sign of things improving any time soon. Throw in the fact that taxes continue to rise and you have the recipe for disaster.
“It’s clear that the government needs to think creatively about how it can support the growing number of people starting side hustles to make ends meet.
“Raising the minimum trading allowance would give millions a financial lifeline. It would mean people with self-employed income can earn more before paying tax. Put differently, they keep more of what they earn through side hustles so they can pay the bills.
“It’s not like increasing this allowance would leave a gaping hole in HMRC’s pocket, either. If anything, encouraging more people to start their own businesses would be rocket fuel for the economic recovery.”