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Contents
In this article we discuss:
Introduction
The Value of A Good Accountant
When Do I Need to Declare My Influencer Earnings?
How Do I Register as Self Employed With HMRC?
What If I Have Made A Loss?
When Do I Need to File A Self Assessment Tax Return and Pay Tax?
What Income Do I Pay Tax On?
What About Gifts Where No Money Is Received (Payments In Kind)?
What Business Expenses Can I Claim When I’m An Influencer or Blogger?
What CAN’T I Claim As An Allowable Expense?
What Are the 23/24 Tax Thresholds and Rates for Self Employment Income?
Do I Need To Pay VAT On My Income?
What Records Do I Need to Keep?
How Can I Keep My Accounts & Business Finances Organised?
Further Information
Introduction
This tax guide aims to give self employed influencers and self employed bloggers who earn money from social content, a better understanding of the influencer tax requirements side of their income.
We also cover paying taxes. Many influencers and bloggers may struggle with understanding their reporting responsibilities in this area.
We cover when content creators need to declare income from their social media accounts to HMRC, how to register as a self employed influencer or blogger, self assessment taxes, paying tax and completing an annual tax return.
This tax guide is for self employed sole traders, and doesn’t cover Limited Company rules which require more reporting responsibilities.
The Value of A Good Accountant
Working for yourself as a blogger or influencer to generate income has so many benefits. Many content creators treat their work as a full time job, many do it as a hobby. If you’re making money from your content, you are considered a business. Taxes can be a daunting area for many.
Simple Taxes are here to change that. An online accountancy service which specialises in taxes and self assessment tax returns for the self employed. Let your personal assigned accountant worry about the tax requirements side of your business for you. We will offer advice and keep you tax efficient.
While using a professional accountant isn’t a legal requirement, it can be extremely beneficial. They will ensure you remain compliant with HMRC legislation when it comes to your tax affairs. They should also be able to save you tax, saving you money in the long run.
When Do I Need to Declare My Influencer Earnings?
When your self employed blogging and/or influencer income and free gifts value exceeds the £1,000 trading allowance in a tax year (6th April to 5th April), you have reporting responsibilities and you will need to inform HMRC you are self employed, and pay tax.
Once the tax year ends on 5th April that you exceed £1,000, you will need to inform HMRC by 5th October.
When your income exceeds the £12,570 personal allowance, there will be a tax liability on your income which you will need to pay.
How Do I Register as Self Employed With HMRC?
This can be done online through the HMRC website. Or Simple Taxes can do this for you.
What If I Have Made A Loss?
If you are in self employed influencer or self employed blogger and make a loss in the tax year, you must still declare your self employment figures to HMRC.
The loss can be carried forward and offset against future self employment profits.
Or alternatively, if you have employment income, the self employment loss can be set off sideways against your employment income, which may result in a tax rebate.
When Do I Need to File A Self Assessment Tax Return and Pay Tax?
The tax year ends on 5th April each year. You then have until 31st January the following tax year to file your tax return and pay any tax due on any profits after expenses are deducted.
If your tax bill exceeds £1,000 you will be required by HM Revenue & Customs to pay tax payments on account towards the following tax year. The exact amount of payments on account are due on 31st January and 31st July.
What Income Do I Pay Tax On?
Content creators will pay income tax and National Insurance on their yearly earnings – self employment profits. This is the total income in the tax year, less any tax deductible business related expenses.
The income of a contact creator is usually in the form of income generated from; social media content, blogging, guest blogging on other sites, subscription services, selling ad space, and receiving gifts. We discuss receiving gifts in more detail below.
What About Gifts Where No Money Is Received (Payments In Kind)?
In addition to physical income, social media influencers must also pay tax on ‘payments in kind’. When they accept gifts in exchange for social media content.
Payments in kind are none cash items that have been gifted, usually in the form of experiences or products.
Payments in kind are gifts to influencers by businesses, in return for exposure on social media platforms via an influencers social media accounts.
When receiving payments in kind, it is best to verify the cost (retail price, market value) of the service or item and get it in writing, so you have good proof for HMRC if ever needed in the future.
Receiving a gift creates revenue, and it is important to understand that there are still tax responsibilities when there is no monetary value.
Some influencers also earn money when they sell ad space. This is income that must also be declared.
What Business Expenses Can I Claim When I’m an Influencer or Blogger?
Deducting expenses ultimately reduces your tax bill. Below is a list of common allowable business expenses that many content creators & social media influencers can claim to get tax relief on their UK tax bill:
Equipment (lighting, cameras, etc)
Advertising and marketing costs (website, web hosting, business cards, social ads to boost traffic, etc)
Bank charges if you have a business bank account
Laptops, ipad, phone
Licences & subscriptions
Software expenses (eg photo editing software)
Props purchases
Make up
Freelancers hired
Travel expenses
Work related fuel costs
Training costs and courses expenses
Business insurance
Use of home as office – a portion of utility bills, broadband costs, etc
Printing, postage and stationery expenses
Legal fees
Agency fees
Accountancy fees
Telephone expenses (business % only)
Professional fees
Other costs which are classed as a business expense wholly for business purposes, and not for your own personal use (personal expenses)
What CAN’T I Claim As An Allowable Expense?
There are a few things which you can’t claim as a business expense:
HMRC interest & penalties
Personal expenses
Parking fines
Training courses for new skills which don’t relate to your content creation venture
What Are the 23/24 Tax Thresholds and Rates for Self Employment Income?
Income tax is payable at 20% for profits over the £12,570 tax free personal allowance. This increases to 40% for any income over £50,270.
Class 2 National Insurance contributions are a set weekly amount of £3.45 when your profits exceed £6725 (we recommend paying voluntary Class 2 NI contributions if your profits are below £6725, so that you still get the annual tick towards your state pension).
Class 4 NI is 9% of any profits over £12,570.
Sound complicated? Don’t worry, tax obligations often are! When you complete your government tax return online HMRC will automatically calculate any tax due and tax allowances for you.
Or you can use the service of a qualified accountant such as Simple Taxes, who will be able to offer professional advice specific to your current situation. Specialists in self employed tax returns, we will spot areas where you may have potential tax savings and ensure you pay as little tax as possible. We also ensure never miss a deadline. Extra bonus – you claim any accountant fees as an expense!
Do I Need To Pay VAT On My Income?
If your gross income (income before expenses) exceeds £85k in a 12 month period, you are required to register for VAT.
Once registered, you must pay 20% VAT over to HMRC on your income.
You can reclaim any VAT paid on purchases to reduce your VAT bill.
What Records Do I Need to Keep?
When you are self employed you are legally required to keep all of your business records (bank statements, sales invoices, purchase and expenses invoices), for 6 years plus the current tax year.
This is incase HMRC ever ask you for proof of your figures. They can issue penalties if the required documents not available.
How Can I Keep My Accounts & Business Finances Organised?
Here are a few tips for social media influencers when it comes to keeping accurate records and keeping on top of your business accounts and finances:
Open a business bank account – this keeps all of your business income and expenditure in one place, separate to your personal income, making completing your year end tax return 100x easier.
Use accounting software such as Quickbooks – keep on top of your bookkeeping on a monthly basis, keeping digital records so that you can see how your online income business is performing. Do you need help with bookkeeping and setting up Quickbooks? Simple Taxes can help.
Keep all of your receipts and bank statements in one place – either by cloud storage like Google Drive, Quickbooks, or in a box.
Further Information
For further information on self employment, please read the HMRC guidance here.
If you need help with registering as self employed, or completing your tax returns, get in touch with us today at www.simpletaxes.co.uk .
Disclaimer
The information contained in this blog is for general information purposes only, and not for accounting and tax advice. You should speak to a qualified professional about your specific circumstances before acting upon any of the information in this blog.
Date Published: July 2023
