Passive income, generally defined as money that you earn without working hard for, can sound too good to be true. After all, is it really possible to make money in your sleep?

The good news is that yes, it is absolutely possible! Passive income isn’t necessarily ‘easy money’, as you do have to put in work at the outset. However, once you’re all set up, it becomes a fairly low-effort ongoing income stream and a fantastic step towards true financial freedom. 

By getting your passive income strategy right, you can earn more money long-term, diversify your income streams and fully enjoy your time off as your wealth builds behind the scenes. 

Top passive income ideas for the UK

In today’s article, we’ll give you the inspiration you need to get started by walking you through seven of the best - and most popular - ways that savvy side hustlers are generating passive income today:

1. Open up a stocks and shares ISA

We had to start with one of the most accessible methods of generating passive income - making money through investments. For beginners, we’d recommend opening an ISA (Individual Savings Account), which lets you earn tax-free interest on your savings. 

While it may not feel as glamorous as starting your own ecommerce business or running a super successful blog, opening up an ISA is a seriously smart financial move - and one of the safest, best ways to earn passive income through interest. 

There are a few different types of ISA, with one of them being a stocks and shares ISA. This provides returns through dividends and capital appreciation (the value of your investment going up). 

When you’re setting up your ISA, you can choose how many risks you’re happy to take with your money. A higher risk level means you could see some dips along the way, but could also lead to greater returns over time. You can also set up a direct debit, so a certain amount of money is paid into your ISA each month, then sit back and watch your savings grow over time. 

When it comes to choosing an investment platform, it’s important to take the time to do your own research or speak to a tax professional to determine which is the best fit for you. Wealthify and Nutmeg are two great options for people who are new to ISAs as they are designed to deliver a straightforward, transparent and simplified user experience. 

2. Publish an ebook or guide

If you’re an expert on a particular topic - or just super passionate about one of your hobbies - you can use your knowledge and enthusiasm to create informative, easy-to-download long-form content that can sit beside a paywall and earn you a lot of passive income over time.

As an example, when influencer-turned-entrepreneur Grace Beverley was at University, she reportedly earned over £10 million by selling her homemade workout guides as downloadable PDFs online - all while studying for her final year exams! 

To get started, you could publish anything from a book of niche Victorian recipes to an IT fixes guide, or even a study guide for people taking their driver theory test. Whatever it is you know a lot about, you’ll find others are willing to pay to learn it too.

Check out our article which covers 5 things you should know before starting a side hustle

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3. Create a YouTube channel or podcast

If writing’s not your thing, you could also consider starting your own YouTube channel or podcast and earning money through ad revenue from the platforms themselves.

It’s important to remember that creating this type of content isn’t a ‘get rich quick’ scheme. Running any type of social channel takes work, and you’ll need to bring something genuinely entertaining or valuable to the table, but we’ve classed this as a source of passive income as some ‘evergreen’ content can be left for years and help creators generate passive income long after they stop being active on social media. 

For example, if you create a ten-episode YouTube series sharing the basics of algebra for GCSE students, or a podcast series where you detail fundamental rules of interior design, your content will likely always appeal to people looking for information in that space. That means the clicks will keep on coming, and so will your ad-based YouTube revenue! 

Thinking about becoming a content creator? Check out our tips to make sure content creators don't lose out to AI

4. Work on an online course

Leading on from our previous idea, you can also make money through helping others by sharing valuable information on a learning platform like Udemy or Skillshare. These platforms allow content creators to share their expertise through online courses. You get paid in monthly royalties based on the number of minutes of your classes watched, as well as how many students you’re able to refer.

So, if you’re an expert in a particular topic - from painting or pottery to entrepreneurship or maths - this could be a great avenue for you to turn your knowledge into extra cash. 

5. Licence your photography

If you’re a talented photographer, another great way you can use your creative juices to generate passive income is to turn your creations into stock photography.

All you need to do is upload high-quality, original photos to stock photo websites such as Adobe or Shutterstock (along with relevant keywords and descriptions that make your images easy to find), and you’ll get paid whenever someone downloads your image. Clearly, it pays to be a creative type! 

Did you know what we offer accounting software tailored to photographers?

6. Start a dropshipping business

Dropshipping is a great way to earn money from anywhere, and its convenience and accessibility has made it a top choice for a growing number of entrepreneurs around the world. In fact, the global dropshipping market is currently valued at a staggering $351.8 billion!

In a nutshell, dropshipping involves hiring a third party to take care of all the shipping and logistics involved in running an ecommerce brand. To get started, you’ll need to set up an online storefront where customers can browse and shop for products, then have all orders automatically forwarded to your chosen dropshipping partner, who will ship the products directly to the customer. 

If that sounds interesting to you, don’t forget to read our beginner’s guide to starting a dropshipping business!

7. Rent out property - or a room in your own space

Last but not least, you can make some serious money through renting out property. This one is obviously not something you can start doing overnight, but renting out commercial or residential properties is fast-becoming one of the best ways to generate passive income in the UK.

If that’s out of your budget, you could look into listing your own home on AirBnB while you’re on holiday, or even renting out a spare room in your house. 

The same logic can apply to renting out a spare car parking spot or - if you’re lucky enough to have a lot of outdoor space - letting people pay to use your garden for events. 

Want even more side hustle ideas? Check out our top 25 side hustle ideas for 2024!

Ready to earn more effortlessly? 

We hope this article has helped you decide which type of passive income suits your lifestyle best, or opened your mind to new ways of earning money, where your profits aren’t directly tied to how much time you dedicate to your work each week. 

As you’ll have noticed, almost all of these types of passive income require you to capitalise on your existing skills, resources and areas of expertise. With all of them, you’ll have to be prepared to work hard at the beginning, then sit back and enjoy the fruits of your labour. 

If you have any questions around how tax on passive income works in the UK, or need some help setting up investments and passive income streams, please get in touch with one of our tax and accounting professionals here at Crunch. We’d love to hear from you! or starting a small business

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