Can anyone earn passive income? Expert reveals how to bring in more cash in 2025

Households are facing rising bills as we enter 2025 but there are ways to boost your earnings. Passive income may sound like the ideal way to earn money – essentially bringing in cash while doing very little and continuing with your full-time job.

Rather than a full-time job, passive income – also known as a side hustle – is money you earn automatically, often with little effort and without the hassle of going into an office.

You will need to take time to find and set up the best type of passive income for you, but once established, it can provide regular small payments into your bank account without you noticing that can eventually turn into a significant sum. That can help provide a substantial savings pot that could be put towards money milestones or to cover daily or emergency expenses.

But is it really that easy? And can anyone do it? We asked Sarah Coles, head of personal finance for Hargreaves Lansdown, to highlight some of the top ways to earn passive income in 2025.

If you have a spare room at home, you can put it to work for you. You can rent out a furnished room to a lodger and the taxman will even give you a rent-a-room allowance that means the first £7,500 of income is tax free.

Coles says: “If you don’t want to share your home full-time, you could opt for short-term lets, or a part-time pattern, like term-time lets for a student or weekday rents for a long-distance commuter.”

You don’t need a spare room to make money from your home though, adds Coles. You can rent out spare space in the garage or driveway too, and you have another £1,000 allowance for income from property that you can earn tax-free.

This could be particularly lucrative if you live near a train station where commuters may want to park or a sporting stadium where fans will pay a decent premium to park nearby. You can list your driveway space on websites such as JustPark.

Coles suggests that cash savings can be a straightforward way to make passive income, and you can select accounts that pay out monthly.

Savings rates have become attractive in recent years, paying more than 5% in some instances, due to interest rates rising but there are warnings that many of the best deals could start to disappear now that the Bank of England has been cutting interest rates.

Coles says: “If you don’t need the capital for a fixed period, you can tie the money up for anything from three months to five years and secure a decent rate of up to 4.6% for the full period.

“You can make more on easy access savings at the moment, but these rates are on the way down, so there’s some real value in securing a deal for longer.”

Additionally, basic rate taxpayers can receive up to £1,000 in interest from savings accounts each year without paying tax, while higher-rate taxpayers can receive up to £500. Additional rate taxpayers don’t have this allowance.

If you are willing to take a bit more risk with your cash, investing in the stock market can provide higher returns – although there is risk of losing money.

One way to earn money passively is to invest in dividend-paying stocks. These are companies that distribute part of their earnings to investors on a regular basis, usually every quarter.

Coles says: “If you reinvest those dividends back into your investment portfolio you can also benefit from the magic of compounding over time – where any profits are automatically reinvested without you having to commit new funds.

"Overall, the FTSE remains a fertile hunting ground for attractive and sustainable yields. Although dividends cannot be guaranteed, three stocks which tick the boxes of good and pretty reliable dividends are Shell, Lloyds and Centrica.”

When investing, your capital is at risk and you may get back less than invested. Past performance doesn’t guarantee future results.