How to Generate Extra Passive Income
If you’ve ever wondered if it’s possible to make money whilst you’re asleep – we have good news. It is. Known as ‘passive income’ it can seem a bit too good to be true, but it is entirely possible – you just need to find the right type of passive income that works for you. Whilst it’s often referred to as ‘easy money’, some types of passive income require a bit of hard work! It all depends on how much you want to make, and how much time you have to spare. We’ll take a look at some popular types of passive income, and how you pay tax on it. Types of passive income Here are some of the most popular types of passive income, some of which you can start today. Dropshipping Dropshipping is a popular way to earn passive income. It’s a type of ‘retail fulfilment method’ – which basically means a way of supplying goods to customers. Some popular dropshipping websites you may be familiar with are AliExpress and The Wholesaler UK. It can be a good side-earner because you don’t have to store the stock yourself. Once you get an order on your website, the rest is down to your manufacturer or supplier. In that respect, finding the right manufacturer to work with can make or break your business. They’re the ones handling it all from manufacturing to fulfilment, so you have very little control over the quality of the product or the shipping experience. A bad supplier can make it extremely difficult for you to attract customers – especially if you have to spend time issuing refunds or dealing with poor reviews. It’s well worth weighing up the pros and cons, and doing your research. Create online content More people than ever are content creating. Whether that be through YouTube, podcasting or posting on platforms such as TikTok. This is usually referred to as ‘influencing’ where you can make money by: Views and followers Affiliate links Paid partnership videos A gifted product or experience Ads, for example if you run a YouTube channel Influencing can feel like a full-time role, and less ‘passive’ than some of the other options. But many creators build their audience up slowly over time. There is huge potential to make it less passive. Let’s use GK Barry as an example. She began posting on TikTok in 2020 whilst completing a degree in film studies. Within a year of posting regular content, she surpassed 1 million followers and now hosts her own podcast. Influencing can be mentally tough, and the money you make can fluctuate, so it’s important if you do take it up full-time you save some of your earnings for both tax and living expenses. Affiliate marketing Affiliate marketing is another great way to make passive income. If you’re unfamiliar with it, it’s essentially where you promote a business’s products or services and receive commission for each sale or lead generated. In this instance, you’ll have your own affiliate link, where you may even offer exclusive discounts to your audience. Only partnering with businesses that align with your brand or audience is important. For instance, if you’re a finance influencer, promoting bookkeeping software may be a good call. Promoting vitamins may be a little off brand. There are also affiliate programs you can join – for instance Amazon Associates. This is a free programme where you can earn commission by promoting Amazon products on your website through your own affiliate link. But again, it’s important to only promote things that align with your brand. Renting out property (or your own place) This isn’t one you can start right away, but renting out your property or room could be a major source of passive income. Many people put their home on Airbnb whilst they’re on holiday, and some even rent out their spare room on a full-time basis. If you’re not comfortable with people in your space, and you have the budget, you could consider buying and renting out properties. This is a lot of work at first, but once you have tenants, it’ll begin to feel like more of a passive source of income. Print on-demand If you’re a creative, print on demand is a perfect way of earning passive income whilst showcasing your talents. It’s similar to dropshipping, because once you’ve created your design, a supplier will then produce and ship it. You can usually choose to display it on things like clothing, home décor, or even accessories. For example, let’s say you’ve made some art based on a popular TV show. You can have your artwork transported onto a t-shirt, mug, journal, or poster without taking a huge financial risk. Just make sure you’re not breaching any copyright or Intellectual Property rules! Sell things you make online (or re-sell goods you own) Opening up your own shop on Etsy or eBay is a great way to earn passive income. Whether you’re creating bespoke items, or you’re buying products to resell and make a profit. If you don’t have a business idea in mind, many people sell their old clothes on sites such as Vinted. Selling old items can be a bit of a grey area when it comes to tax. If you’re ever unsure – speak with an accountant for more advice. Read our guide Will I be Taxed if I Sell My Old Clothes Online? Open an ISA ISAs (Individual Savings Accounts) are one of the most accessible ways to earn tax-free income – if you have spare cash to put into one, of course! How you make money though, depends on the type of ISA you choose. For example, a Cash ISA lets you save money and earn tax-free interest, whereas a Stocks and Shares ISA allows you to invest in things like shares, funds, or bonds — and any profits or dividends you earn are tax-free. For example Let’s say you save £2,000 in a Cash ISA with an interest rate of 2%. You’d earn £40 in interest each year — and you
Sick Pay for the Self-Employed
Taking time off work for health reasons is worrying enough without adding financial pressure into the mix. Most people who work full or part time for an employer receive Statutory Sick Pay (SSP), but if you’re self-employed this unfortunately isn’t an option. The good news though is you may be able to claim other benefits whilst self-employed if you can’t work due to illness, injury, or disability. In this article we’ll go over what options are available to you. What sickness benefits can I claim if I’m self-employed? There are some sickness benefits you may be able to claim if you’re self-employed and struggling to work. A good place to start is the benefits section of the Gov.uk website as you’ll find the most up-to date information. We go into more detail below, but typical examples include: Employment and Support Allowance Personal Independence Payment (PIP) Universal Credit for self-employed people Employment and Support Allowance The Employment and Support Allowance (ESA) can be claimed by people who are self-employed, unemployed, classed as a student, or employed but not eligible for Statutory Sick Pay (SSP). Will I have to stop working? The good news for self-employed workers is that receiving ESA doesn’t have to mean putting your business on hold. If your illness allows you to continue work, but restricts or reduces your ability to do so, you may still be eligible. Am I eligible for the Employment and Support Allowance? To be eligible for Employment and Support Allowance (ESA) you must be younger than state pension age, older than 16, and have a ‘fit note’ from your doctor. If you already get Statutory Sick Pay or Jobseeker’s Allowance, you will not be able to get the Employment and Support Allowance at the same time. How do I apply for Employment and Support Allowance? You can apply online or via your local Jobcentre Plus. Part of the assessment process involves demonstrating you are unable to work because of your illness, injury, or disability. You might need to complete a Work Capability Assessment questionnaire, or have a medical assessment at an in-person appointment. If you have been diagnosed with a terminal illness, then you will not have to be assessed. Personal Independence Payment (PIP) PIP is a benefit paid to people who find it harder to get around, or who need extra care due to a long-term health condition or disability. It consists of two components: mobility, and daily living. The mobility component is intended to help with getting about, and the daily living element is for extra help with day-to-day activities such as washing or dressing. You can claim for PIP between the ages of 16 to 64, even if you are working. Read up on Personal Independence Payments and how to claim on Gov.uk/PIP Universal Credit for self-employed people You may be able to claim Universal Credit if you’re self-employed. This can help you meet your costs if you’re on a low income or looking to grow your business. To claim Universal Credit, you’ll need to show: Your main source of income is through self-employment You regularly work as self-employed You expect to make a profit You have records relating to your self-employed work, such as receipts, invoices, and accounts information The above evidence all shows you’re ‘gainfully self-employed’ which means you won’t be expected to look for additional work on top. Bear in mind though, it will be assumed you are earning roughly the same as someone in a similar employed job. This is usually based on what someone your age would earn if you received National Minimum Wage for the hours you work. This amount is known as the Minimum Income Floor (MIF). How does the Minimum Income Floor work? Universal Credit will not make up the difference if you earn under the Minimum Income Floor (MIF). This means you might need to top up your income with extra work if possible. However, if you earn over the Minimum Income Floor (MIF), your actual earnings will be used to work out your Universal Credit payment. If you only became self-employed recently, the Minimum Income Floor will not apply for 12 months so you will need to be able to prove you’re building your business and/or you have a fit note from your doctor explaining any illness or injury. As part of the process, you’ll be assigned a Work Coach who will guide you. If you are able to work at all around your illness, disability, or injury, you will need to report anything you earn to the Department for Work and Pensions each month. The Gov.uk website has all the information you need about universal credit and how to apply. See Gov.uk/universal-credit. What else can I do to protect myself? Unfortunately, we all have times when we get sick or hurt ourselves, but with the cost of living high, the thought of limited or no income when you’re self-employed can be terrifying. Wherever possible, it’s a good idea to build a safety net of funds which you can pay yourself if you ever can’t work. It’s definitely something to consider when deciding your pricing structure (which should also factor in you having some time off for holidays!). You might also consider hiring freelancers to help you fulfil any existing contracts or projects. Although there will be a cost involved, it may help to avoid disappointed customers. There are also different types of business insurance, like income protection insurance. Outside of your business, you could also think about critical illness cover (which can help if you have a mortgage, for example). Arming yourself with the facts and coming up with a plan ahead of time can make a huge difference to both your finances and your stress levels.
June 2025 Client of the Month: LemonTop Digital
We help drive long-term success for ambitious brands through organic growth methods in SEO to get you in front of your ideal customers when and where they’re searching for your offering. Hey Jack! Tell us about your business We help drive long-term success for ambitious brands through organic growth methods, specialising in SEO to get you in front of your ideal customers when and where they’re searching for your offering. We’ve recently launched our new platform, Compass, to allow SME’s to access expert-level SEO at a fraction of the cost of an agency. Compass is built specifically with small businesses in mind, who need the ability to grow profitably and all of the benefits that SEO provides more than anyone, yet it is often prohibitively expensive for them. The platform will walk you through creating the perfect SEO strategy for your business and then a guided step-by-step process to execute successfully in just a few hours each month. What drove you to start your business? Over the past few years paid advertising has become increasingly expensive and we were seeing lots of small-businesses struggling to scale profitably (or just make consistent sales) while managing cashflow and margins. Especially alongside increasing operating expenses from the inflationary environment, global shipping issues and rising unit costs. It was then that we wanted to help SMEs utilise the benefits of SEO and organic growth as we knew it could be the advertising platform that would offer them: Huge ROI due to the compounding nature of the results from SEO (cost stays roughly the same while results compound) The ability to scale without eating into their margins Getting in front of their ideal customers when and where they’re looking for their products or services High quality traffic to their website with high conversion rates So we set up LemonTop to do just that and have seen fantastic results for our clients and their performance metrics. What particular challenges did you have to overcome in setting up your business, and since then? Launching the platform (Compass) has been a long road to ensure it met all of our requirements to be able to successfully help small-businesses gain the results we knew were available to those that can focus on their SEO. Another significant focus has been educating our clients and the market about the importance and intricacies of SEO and it’s positive impacts on their metrics over-time. Most are far more aware of paid-advertising and know the instant nature of it driving sales, but it won’t show immediately in the numbers how they can be making more sales but actually doing so unprofitably and in a way that won’t be scalable over a number of months. SEO works differently and can take a little longer to start seeing the results in the numbers, but can have the positive impact that everyone is looking for on reducing customer-acquisition costs, boosted revenue, increased profit, high-intent traffic and average order value to name just a few effects. But the education piece in the interim is a focus to ensure our clients are looking at the right metrics and understanding the nature of SEO. Why did you choose The Accountancy Partnership? We decided to work with The Accountancy Partnership after seeing their reputation for providing high-quality, reliable accounting services. Renowned for their client-centric approach, tailored to the unique needs of each client gave me the confidence that they would act as a partner rather than a distant third-party as accountancy firms can often be. The firm’s competitive pricing without compromising on the quality, has been exactly what we were looking for when we got started. Have we helped you overcome any challenges, and if so, how? Every time I have a question on some specifics related to our business they are quick to respond and answer with the detail necessary for us to be able to make well-informed decisions. What do you have planned for your business in the future? The big one which is coming this week is the launch of Compass, our guided SEO platform built for small businesses. It will be the all-in-one SEO solution for anyone to be able to achieve organic growth in just a few hours by simply following the steps of the platform. We’re super excited to be able to bring all of the benefits of SEO/organic growth to those that need to be able scale profitably the most and looking forward to seeing those results help them grow!