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Understanding Taxes: A Simple Guide for Social Media Influencers and Content Creators!

Updated: Oct 16, 2023


In recent times, the rise of social media influencers and content creators has reshaped the landscape of advertising and brand promotion. However, this revolutionary change has also captured the attention of HM Revenue and Customs (HMRC), leading to an intensification of scrutiny regarding the declaration and payment of taxes owed by influencers. Hamollisons Bookkeeping Services aims to shed light on the vital aspects of tax obligations that influencers should be mindful of, ensuring compliance and understanding of the tax implications that arise from their unique mode of income.



HMRC's Initiative:

Earlier this year, HMRC initiated a ‘nudge’ campaign, sending letters to social media influencers suspected of non-disclosure of their taxable income, emphasising the importance of abiding by established tax regulations. The campaign also underscored the tax implications on gifts received by influencers in exchange for brand promotions.


Income Nature & Obligations:

Social media influencers and content creators often receive payments in cash or through sponsorships, and many also receive gifts in return for promoting brands. It is crucial for influencers to realise that such incomes, including received gifts, count as taxable income. The lack of awareness surrounding this can lead to non-compliance and legal complications.


Application of Normal Trading Rules:

Contrary to popular belief, there exist no special tax rules for influencers and online traders. Normal tax rules apply to all, making it mandatory for those with trading income exceeding £1,000 to declare it to HMRC. Registering for Self-assessment is essential and can be accomplished online on the Gov.uk website. The applicable income tax is payable on profits exceeding the personal allowance, and Class 2 and Class 4 National Insurance contributions are mandatory once profits surpass £12,570.


The Implications of Gifts:

Receiving gifts is commonplace for many influencers. Brands often send gifts either as a goodwill gesture or in exchange for brand promotion. HMRC does not consider gifts provided in return for promotions as simple business gifts as they constitute non-monetary consideration for promoting a business or advertising a product, deeming it a barter transaction. Therefore, tax is applicable on such gifts, valued at the amount for which the influencer could sell it, not its retail value.


Conclusion:

It is imperative for social media influencers and content creators to have a comprehensive understanding of their tax obligations and to declare their incomes accurately. Hamollisons Bookkeeping Services remains at the forefront in providing guidance and assistance in navigating the complex tax landscapes faced by influencers, ensuring adherence to tax norms and regulations.


Partner Note: ITTOIA 2005, Pt. 2

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