Some 7.5million earn on average £360 a month each on top of their primary income from a side business.
Many turn their hobbies into cash, sell goods online through sites such as eBay or make extra money through arts and crafts, according to research from lender Sunny.
The trend will grow as earnings struggle to keep pace with inflation and retirement incomes stagnate, amid rock-bottom annuity and savings rates.
However, the new breed of micro-entrepreneurs has been warned they may have to pay income tax on their earnings.
Sunny’s research shows that two thirds of those with a side hustle sell goods such as second-hand furniture or clothing at car-boot sales or through eBay and other websites and apps such as Amazon, Depop and Shpock.
Others make extra cash through arts and crafts with creative pursuits such as making pottery and designing jewellery, or use the knowledge and experience gained over their working lifetime.
Ross Jackson from Slough earns up to £600 a month selling hi-fi accessories, on top of his part-time job driving for Sainsbury’s.
After working as a sales rep in the audio equipment industry for more than 30 years, Ross, 58, from Slough, was left with a shed full of stereos, speakers and amplifiers, which he sold on eBay and Gumtree.
His success persuaded him to turn this into a side business: “I go to auctions of electrical retailers and hi-fi businesses that have gone bust, buy up the stock cheaply and resell it online.”
Ross added: “Selling online fits nicely alongside my part-time job and caring for my 81-year-old father.”
Sunny managing director Scott Greever said a side business can give people a sense of purpose and pride in their work: “Microentrepreneurs are using their talent and creativity to take taking control of their finances, boost their personal income or be their own boss.”
Growing numbers will pursue a side business well into retirement, as the number of Britons expecting to work beyond the age of 70 doubles in just seven years, from one in six in 2010 to almost one in three.
Almost half of these plan to retire from a main job but keep working part-time in another area, according to the research from LifeSight, part of Willis Towers Watson.
Head of proposition development David Bird said working later can help people keep active and creative, but others cannot afford to stop work: “Many who are expecting to retire later are not doing so out of choice.”
Under tax laws introduced last April, home traders can sell up to £1,000 of items a year on sites such as eBay without paying tax on their profits.
Sarah Ghaffari, technical tax manager at the Institute of Chartered Accountants, said the allowance also applies to selling items in a car boot sale, baking and selling cakes, and offering services such as accountancy and DIY: “A word of warning, if you are self-employed you might not be able to benefit from the allowance.”
Sellers do not need to declare earnings up to this level, but will need to complete a self-assessment tax return once the income exceeds £1,000.
“Keep appropriate business records and notify HMRC following the end of the tax year that you need to complete a return,” she added.
Those renting out a room on Airbnb can earn up to £1,000 free of tax on top of this allowance.
However, they cannot claim both this and the Rent-a-Room Scheme tax break for those taking in lodgers.
Rent-a-Room lets you earn up to £7,500 a year tax-free from letting out furnished accommodation in your home or half that if you share the income with someone else.
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