Do Influencers Pay Taxes?

With over 98,000 influencers in the UK alone, influencing has become a popular way for people worldwide to earn income from their phones.

It’s important to ensure that if you’re making money as an influencer you’re paying the right level of tax. If you don’t pay the right level of tax for your earnings, it can lead to penalties and possibly imprisonment.

But how much tax do influencers have to pay for their earnings? Let’s find out in today’s blog, where we will take a look into everything you need to know when registering as a self-employed influencer and paying taxes as an influencer.

How Much Tax Do Influencers Pay?

Income made by influencers must be taxed the same as other forms of income. All self-employed workers, including influencers, are entitled to a tax-free personal allowance of up to £12,570 per year. Any amount over this will be taxed the relevant amount.

If you are an influencer, it is important to recognise that your earnings are subject to tax. Whether you receive payments in cash by offering gifted products, goods, or services, it all still counts towards your tax payments.

If you are an influencer, your income source may come from:

• Sponsored Content – Sponsored content involves brands or companies paying you to promote their products or services on social media platforms. You can receive compensation from this, and so this is considered taxable income.
• Affiliate Marketing – Many social media influencers use affiliate links to earn a commission when their followers purchase through these links. These earnings are then taxable.
• Ad Revenue – If you monetise your content on platforms like YouTube or have a blog with ads, the income generated from advertising is also subject to taxation.
• Product Collaborations – Some influencers receive free products, services, or gifts in exchange for featuring them on their platforms. The value of these products and services must be accounted for in your tax return.
• Merchandise Sales – Influencers who sell their merchandise or products directly to their audience must report the income generated from these sales.

Income Tax and National Insurance for Influencers

In the UK, influencers are considered self-employed if they earn income from promoting themselves across social platforms. If you are self-employed, you are required to pay both Income Tax and National Insurance contributions on your earnings.

The amount of Income Tax and National Insurance you pay depends on your total earnings, and there are specific thresholds to consider.

Income Tax

Income Tax rates are structured in bands, with different rates applying to different portions of your income.

It is essential to check the latest rates and rules with HM Revenue and Customs (HMRC), which a dedicated accountant can help you with.

National Insurance

National Insurance contributions help you qualify for certain state benefits. The rates and thresholds for National Insurance contributions can also change, so it is crucial to stay up-to-date with the latest figures. There are many different resources available to browse.

Registering as Self-Employed

If you are earning income as an influencer in the UK, you should register as self-employed with HMRC. This process involves filling out specific forms, providing details about your business, and setting up a tax account.

By registering as self-employed, you’ll receive a Unique Taxpayer Reference (UTR) and gain access to the necessary tools and resources for managing your tax.

To ensure that you are paying the correct amount of tax you should keep strict records of your income and expenses. These records should include invoices, receipts, and any other financial documents related to your influencer business.

Other cases include tax implications, barter transactions, trading incomes and deductible tax documents. In the UK, you must maintain these records for at least five years following the tax year to which they relate.

Influencer Expenses You Can Claim

The good news is that, as a self-employed influencer, you can deduct certain expenses from your income before calculating your tax liability. These allowable expenses can help reduce your overall tax bill. Typical deductible expenses for influencers may include:

• Equipment – Cameras, smartphones, laptops, and any other equipment necessary for your influencer work.
• Office Space – If you have a dedicated workspace for your online activities, you can claim a portion of your household expenses, such as rent or mortgage interest, utility bills, and council tax.
• Travel and Accommodation – Expenses related to work-related travel expenses, including transportation, accommodation, and meals, may be deductible.
• Subscriptions and Software – The cost of software, tools, and subscriptions used in your influencer work can be deducted.
• Marketing and Promotion – Expenses associated with promoting your content, such as advertising or sponsored posts, can also be deducted. For any of these expenses, it is crucial to consult with an influencer accounting professional to ensure you are correctly categorising and documenting them.

Filing Your Tax Return as an Influencer

The deadline for filing your self-assessment tax return is January 31st. You will need to report your income, expenses, and any other relevant financial information in your tax return. HMRC provides online tools to help you complete this process.

It is advisable to file your return well before the deadline to avoid potential penalties, but a professional accountant can assist you with this, saving you a lot of time and effort attempting to navigate through the process on your own.

VAT Registration for Influencers

If influencer earnings exceed a certain threshold, you may be required to register for VAT. The VAT registration threshold is £90,000.

VAT registration can have a huge impact on your financial management and obligations, so it’s wise to seek professional guidance if you approach or exceed this threshold.

Influencer Accounting at DH Business Support

Seeing as the world of earning as an influencer can be confusing, it is useful to know that specialist accountants exist who have experience and knowledge within this industry to help you.

DH Business Support is here to support you. We can help you register as self-employed with HMRC, ensure you are staying tax efficient, and help you complete your self-assessment annual tax return, to name a few things.

Make sure to find out more about our influencer accounting services on our website, and please get in touch if you have any questions.