How to make money from home

Before you start – important things to consider

You won’t be alone in considering how to make extra money at home. One in five people have started a side hustle since 2020, according to the insurer Aviva. But the rules around tax are different to a salaried job and you might need to pay for extra insurance.

Tax

When you work in a salaried job, tax is automatically deducted from your wages before the money arrives in your bank account. This is different when you are a freelancer or a sole trader. Instead, you will need to complete a self-assessment tax return and pay tax each year.

HM Revenue and Customs (HMRC) allows everyone a ‘trading allowance’ of £1,000 per tax year, which runs from 6 April to 5 April the following year. If you receive more income than this in a tax year, you will need to pay tax on any additional income and complete a tax return.

Several large selling platforms, including Airbnb, Vinted and eBay have agreed to share with HMRC information about the money people make through their sites so even if you don’t report the tax, the tax office may contact you to pay it.

There are full details on the government’s website on who needs to pay this tax.

Tax breaks

You may benefit from some tax breaks for working from home. This applies if your job doesn’t have an office, or you live too far away from it. You may be able to claim tax relief on expenses related to making money at home, such as on phone bills.

If you are making things to sell, you can claim the cost of materials and tools. You can also include things like postage and packing.

Scams

Scams promoting working from home opportunities have risen in the last few years. They are often used by criminals to steal personal or financial details from victims and the police often send out warnings against these scams.

You should be wary of anything that sounds too good to be true, such as jobs that require little effort for a lot of money.

If you think you have been scammed, you can report the crime to the police at Action Fraud or by calling 0300 123 2040.

How to get started

To get started making money from home, you will need to think about what skills you have, what services you can offer, and how much money you could potentially make.

How much time and effort you can spare could be the deciding factor. While you may dream of financial independence and achieving a perfect work-life balance, it can take time to achieve this and for some people it will never be possible.

Identify your skills

Before you begin, it can be useful to identify your skills. The following checklist can help:

• Make a list of the skills you have. You may have developed these skills throughout your career, or in your personal time,
• Include any of your achievements, both academic or work-related and those you’ve gained elsewhere
• Look at how your skills could be used in a different way. Many skills are transferable, and you may be able to convert something you know you’re good at to a different job.

Investing your time

To gain money from home, you will need to invest some time setting up your business. You might need to consider:

• Market research: to find out how many people might buy what you are offering and for how much?
• Your input costs: such as materials, heating and lighting, internet, transport, print and digital marketing costs
• Taxation: VAT if you will earn past the threshold, PAYE if you employ someone, duties if you are importing/exporting or using certain materials or products
• Licences: for software or copyright or to trade in certain markets
• Insurance for working from home, for an office, for using your car for work, covering your goods in transit, public and employer’s liability or professional indemnity
• Accounting: you’ll need some software and maybe to hire an accountant
• Banking: will you need a separate business account or a credit card reader?
• Online fees: for marketplaces or for webhosting, or for Paypal charges
• GDPR: if you keep customer records on your computer or phone you’ll need to register and comply
• Health and safety: not just to watch out for yourself but anyone you employ or members of the public

If you don’t have much time, start small to see how you go. Starting a home-based business from scratch is going to require a lot more time than selling your old books or clothes through an existing online platform, for example.

Tracking your earnings

Keep track of your earnings from the start. Remember, if you are selling things, any earnings over £1,000 will be taxed. For other freelance work, you will need to declare all your income and costs – detailed financial planning and record keeping will make this process smoother. Keep a note or spreadsheet, or maybe use a separate card/account for your business income and outgoings.

Sell some possessions

Having a clear out and selling some of your possessions is an easy way to make money from home. There are many websites set up for selling old items but watch out for the fees – for listing items and delivery – as these vary between sites.

1. Clothes

Clean clothes in a good condition can be sold through an online marketplace or website including eBay, Vinted, Depop and Facebook Marketplace. You’ll earn more for items that are brand new, especially if the labels are still on, and for clothes that are from well-known brands.

You’ll need to register on most websites and list your item for sale, along with a few clear photos showing it and a description. You can choose how you get paid but if you use a system like Paypal, there is more protection than asking for cash.

2. Furniture

If you’ve got an old sofa you no longer need, or a wardrobe you’re replacing, you could sell the items online. Most sellers of larger items state that the buyer needs to collect or arrange their own delivery, but you could offer to deliver and add the costs to the price.

Facebook Marketplace and eBay are set up for selling unwanted goods online but you could also use local groups on Facebook to find nearby buyers.

3. Trade in your old phones

You can trade in old mobile phones, even those that are broken or not working. Comparison websites such as Sellmymobile can quickly show you the amount you could get for an old phone on a range of different websites.

A working iPhone 12 (64Gb) could fetch as much as £200. Broken it might be worth as little as £10 (prices correct at time of publishing). Once you agree to a price, you will have to send the mobile to the company before it pays you for it.

4. Car boot sales

Car boot sales require a little more effort, but you don’t need to factor in postage or delivery. They start early, usually from 8am or 9am, and you will have to pay for a spot, usually around £10.

While they can be hit or miss, as you never know who will turn up, they are a good way to clear a lot of items in one go. You can find your nearest by looking in your local newspaper or searching on a website such as carbootsales.

Rent space or items you don’t use

A great way to make some extra money is to rent out space or items you don’t use. There are lots of official websites that can add an extra layer of protection if something goes wrong, such as an item being damaged or something being stolen while it’s being rented out.

5. Parking space

If you have a parking space you don’t use, you could rent it out. The amount you can earn depends on where your parking space is, with those near to stations or in areas of high demand earning more.

Websites you could use include JustPark and ParkLet. You’ll pay either a percentage of the amount you charge the tenant or a one-off fee. Check your tenancy or deeds to be sure you have permission first.

6. Your car

There are several rental websites for hiring out your car, including Hiyacar and Getaround. You list your car on the website and people can book it out, whenever it’s free. These websites will take a cut of the rental fee and you earn the rest.

Car insurance is usually included for the driver renting your car, and this should not impact your own car insurance. However, it’s worth checking this before you agree to a rental.

7. A room in your house

You could rent out a spare room in your house. If you rent a furnished room, either on a long-term or temporary basis, you can also use the government’s Rent a Room scheme and earn £7,500 a year without paying any tax. Check your home insurance covers you renting out a room and your lease permits sub-letting.

8. Storage space

Websites such as Stashbee connect people who have items to store with those who have storage space, such as a garage, loft, lockbox, or storage container. Stashbee charges a 5% fee from every booking but it is free to list your space. If you’re storing someone else’s items in your house, you may need to tell your home insurer.

9. Hire out tools

You can earn money through hiring out tools and other equipment you own, from drills and lawnmowers to drones and sewing machines. Websites such as Fatlama connect owners and renters and provide a £25,000 guarantee for owners to replace anything that’s broken or damaged.

Use your skills

You don’t have to learn something new. You could use your existing skills to start making an additional income from home, either selling products or services or teaching others what you know. This could be anything from a language to making bread.

10. Become a tutor

If you are good at something and know how to pass on your skills, you could make money by becoming a tutor. This could be with students coming to your home or by tutoring online. You don’t always need an official teaching qualification either.

Jobs are listed on websites such as Tutorful and MyTutor, and you can earn £18-£30 per hour depending on your experience.

11. Create an online course

From pottery to photography, you can create an online course for just about anything. If you use an online course platform, such as Udemy, you will pay a fee for the service, which is usually a percentage taken from any course fees you receive.

12. Sell your arts and crafts

If your skill is more practical, you may be able to sell your arts and crafts items online. To do this you’ll need an online presence, such as a website, to market your items, and a system for customers to pay. You could sign up to an online marketplace, such as Etsy, which takes a lot of the work away, but you will pay for the service.

13. Sell stock photos

Budding amateur photographers could make extra money selling their snaps to the big stock photo websites. These images are used by companies and publications across the world and if they buy one of yours, you will earn money for it. You can set up an account on websites such as Getty Images or Adobe and upload your photos.

14. Monetise a blog

Bloggers with a good following can monetise their blogs through advertising and affiliate marketing links. Companies such as the Awin network list potential advertisers for e-commerce ventures. If you see a company you think would suit your blog’s audience you can sign up for an affiliate marketing link and if your readers buy something from it, you earn a fee.

These are known as passive income streams as you don’t actively sell anything.

15. Ironing services

Many people hate ironing, or are too busy, and they will happily pay for ironing services. If you’re a whizz at ironing, you could charge for your services. This can be per item or for a bundle of clothes, but you might have to arrange collection and delivery of the items.

You could set up on your own or join an agency (there are national and local firms so choose which works best for you). If it’s an agency, you’ll usually be covered under its insurance but it will take a fee. You may also need to show proof of your self-employment status if you’re working with an agency.

Find an online job

There are lots of places to find an online job, whether you’re freelancing for your main income or just dipping your toes into the world of online side hustles.

16. Virtual assistant

If you are highly organised and have relevant experience or skills you could become a virtual assistant. You could register to work through an agency, which will charge fees, or you can work for yourself – which means you’ll need to set up your own website. The Society of Virtual Assistants is full of information and it says average rates of pay are around £27 per hour.

17. Take surveys

If you’ve got the time to take an online survey, you can start earning money for doing it. You’ll be asked your opinion on a range of topics and in return you’ll be paid, in money or through vouchers. There are several big websites that list potential survey jobs, including ispysurveys and Swagbucks. You can fill these in from anywhere in the world, enabling you to become a digital nomad and travel while you work.

18. Customer service

Since the pandemic, many customer service jobs can now be carried out from home and often require staff to work non-standard hours, such as in the evening or weekends. This could fit in well around your day job or family commitments and most are available even if you don’t have any previous experience.

You can find remote work like this on a recruitment website, or you can go direct to a company, such as Amazon, to apply.

19. Data entry

Data entry jobs can be well paid and you can often choose the hours you work, giving you a better work-life balance. You will usually be required to work a certain number of hours per week, which you can fit around your other commitments. To find a data entry job, start by looking at national job listing websites and platforms such as LinkedIn.

20. Website user-testing

When a new app or website is created, the developers will need to test the programme to check it runs well and that there are no errors or glitches in the system. To do this they often pay people who are unfamiliar with the company or programme to test it out. Websites such as Testingtime and Userpeek list available jobs and the requirements needed.

Summary

For many people, working from home has become more common over recent years and the number of work-from-home opportunities has also increased. There are jobs in pretty much every sector for those with experience.

With any work you’re taking on outside of your normal working day, there are important considerations including the tax you may have to pay and the insurance protection you might need.

It may be best to start small to see how you get on, if you find you have the time to scale up, you can then make the move into a bigger side hustle and one day it could become your full-time job.