What Can Influencers Claim On Tax?

Becoming an influencer comes with perks, one of which is the ability to be your own boss. However, self-direction means taking control of your taxes, which isn’t always easy. 

To help, we’ll look at some of the most important questions around influencer taxes. In today’s blog, we’ll answer whether influencers need to pay tax, how influencers pay tax, and what influencers can claim back on taxes.

Do Influencers Pay Taxes?

Yes, influencers do pay taxes on their income. Everyone in the UK pays taxes, provided they are over the tax-free threshold of £12,570.

If you go over the tax-free threshold, then you’ll need to start paying taxes to HMRC. For those employed by a company, you’ll notice this money is automatically deducted from your paychecks.

However, influencers must inform HMRC once they start earning income which exceeds the tax-free limit. As influencers are self-employed, there’s no way for them to know how much they’re earning, unless they self-report. 

How Much Tax Do Influencers Pay?

Just like any income, influencers are entitled to the standard tax-free allowance. Any income earned after this is taxed according to the band you fall into.

In the UK, there are three different tax bands to consider: basic rate, higher rate, and additional rate. Depending on which band suits you, you’ll pay a different percentage of your income to HMRC as tax. 

Whether you receive payments in cash for offering gifted products, goods, or services as an influencer, it all still counts towards your tax payments.

Calculating these figures can take up a lot of time, but investing in an accountant takes this task off your to-do list. You can explore our influencer accounting services to see how we can help you manage the financial aspect of your job.

What Are The Tax Deductions for Influencers?

There are many different types of expenses that you can deduct from your tax bill as an influencer, these include:

1. Filming Equipment

You can add the costs of filming equipment, such as phones, cameras, and microphones, to your tax bill. As long as they are used for business purposes, influencers can claim these on taxes.

2. Non-Gifted Products Purchased to Review

Any gifts you have purchased yourself for the express purpose of reviewing can be claimed back on your taxes, as they’re considered a part of growing and maintaining your business as an influencer. 

3. Online Training Courses

If you take part in any paid training courses, you can claim them back as a tax deduction. However, you need to ensure that they benefit your business in some way and are not just for fun. 

4. Work-Related Travel Expenses

You can claim back 45p per mile when travelling for business-related purposes. However, you must be able to prove the amount you travelled and that it was for your business. You can’t claim for travel outside of influencer activities. 

5. Software and Subscriptions

Any software or subscriptions you may need, such as editing apps, graphic design or social media scheduling tools, can be claimed on your taxes, as long as they are used for your business. 

6. Influencer Accounting Costs

If you utilise the help of an influencer accountant to help you track your finances and work out your taxes, you can add these costs to your tax bill.

You can add anything to your tax bill that accounts for your business costs. If you are unsure, you can check the HMRC guidelines for a more detailed list of what they accept. 

We offer expert accounting services to help manage the financial side of being an influencer. You can find more information over on our website. 

How Do Tax Deductions Work for Influencers?

Influencers pay taxes on their yearly earnings, but you can deduct your business expenses from this total.

For example, if your annual turnover is £50,000 and you claim £10,000 in business expenses, the remaining £40,000 will be taxable income. You will then owe the relevant amount, which in this case would be 20%.

You must keep a record throughout the year of everything you spend on your business. The best way to do this is to keep fully itemised receipts, which HMRC will need to see when it is time for your tax return.

Do I Need Proof of My Expenses?

When you submit your tax return, you don’t need to include your proof of expenses with it in the initial instance. 

However, it is non-negotiable that you keep a record of all the costs you deduct from your tax, so you can show them to HMRC when asked. Your records must be as accurate as possible to ensure you remain compliant with rules and regulations. 

If you submit a tax claim for an item or items you can’t later show proof of purchase for, HMRC will likely remove the expense.

Can I Claim Back Expenses For Working From Home as an Influencer?

Yes, influencers can claim back working-from-home expenses. In fact, there is a range of payments that are eligible for reclaim.  

You can include payments such as rent, wifi, or furniture on your tax return at the end of the business year. However, there are factors to consider before you file these on your tax return: 

• Rent: If you have a room in your home dedicated to online activities that you don’t use for anything else.
• Wifi: Internet access is needed to upload your content and therefore contributes towards your tax deductions.
• Furniture: Desk chairs and desks, or any other furniture that you use only for your business.

What Happens If I Claim an Expense Incorrectly?

If HMRC notices any minor errors in your tax return, they may ask to see your records. As a result, you could end up owing more tax or be eligible for a tax refund if you have overpaid. 

If you notice that you have made an error on your tax return, you should contact HMRC immediately so the error can be rectified. If you’ve already submitted your return, you’ll have to wait 72 hours before you can go in to edit it. Once this time is up, you need to ensure you correct the mistake within 12 months. 

If you don’t alert HMRC of the mistake, you risk a penalty, which can end up costing anywhere between 20% to 100% of the incorrect figure. As such, you must take care when filing your tax return to avoid any costly errors.

Manage Your Accounts With The Help of DH Business Support

Here at DH Business Support, we offer trusted influencer accounting services. Our team of specialists in influencer accounting is here to help you stay on top of your finances.

Our influencer accounting service helps online content creators get the most out of their earnings. We understand that you work hard for your money, and we want to protect your income, helping you to make the most of being self-employed as we do. 

We are here to help you reach your financial goals, so you can put more time into what you do best- creating engaging content. Save the stress and worry of filing incorrect tax returns and let us help you today! Get in touch with us on 0330 088 1701 to learn more.