A complete tax guide for content creators

A new wave of ‘content creators’ has emerged from platforms such as YouTube, TikTok, Instagram and OnlyFans, earning money from the fans they attract with their content. Naturally, HMRC has not turned a blind eye to this booming industry! ​

In order to avoid HMRC’s fines and penalties, it’s important to understand certain tax obligations. Do content creators pay taxes just like every worker in the UK? In this guide, we’re going to cover everything you need to know about tax as a content creator. ​

Income generated from content creation online, or 'influencing', is generally considered to be self-employment income. You'll need to declare your income and related expenses in a self assessment tax return, and pay income tax and national insurance contributions on the profits you generate.​

If you’ve made a profit over £1,000 - regardless of whether content creation is your full time job or a hobby that’s earned you money - you will need to register as self-employed with HMRC and submit a self assessment tax return. ​

That is, unless, you decide to set up a limited company and run your content creator business through your that. In this case you will need to file financial statements and tax returns for your company. If you are drawing money from the company, such as dividends, you will then need to submit a self assessment tax return for yourself.​

HMRC has been known to use information from third parties to learn about individuals that are earning money from online platforms, but have not informed HMRC that they are generating this income.​

The Competition and Markets Authority (CMA) started paying particular attention to content creators and influencers in 2019, and provided the following guidelines regarding what is deemed to be payment (and therefore taxable income): ​

“The CMA considers payment to be any form of reward, including money, gifts of services or products, or the loan of a product.” ​

The CMA have all stated they consider freebies to be a form of payment, even when a product is sent without warning or request.​

When payment is received in anything other than monetary form, it can be tricky to determine the value of the payment and how much to include in your tax return. A free holiday trip from a travel agency as a travel blogger or a free promotional handbag may sound enticing, but you need to declare the cash equivalent value of these ‘free products’ to HMRC, and pay tax on it. It can also cause cashflow problems down the line!​

Not everyone needs an UTR, but if you're generating income of more than £1,000 per year then you will need a Unique Tax Reference (UTR). After registering with HMRC as self-employed you will be sent your personal UTR. Similarly, if you set up a limited company and register for corporation tax with HMRC you will also be sent a UTR for your company. Applying for an UTR can be easily done online, follow the instructions from HMRC.​

In the UK, the VAT registration threshold is £90,000. If your taxable income is more than £90,000 in the last 12 months or you expect to exceed the threshold in the next 30 days you will need to become VAT registered. This works the same for content creators. ​

For example, if a Youtuber’s income is £90,000 for 2022/23 financial year, they need to register for VAT as soon as meeting this threshold, file VAT returns and pay any VAT due to HMRC. Therefore it’s important to keep track of how much you are charging the businesses you work with, and whether you are advertising or promoting their products -  as you are paying 20% of your income over to HMRC, you may want to increase your prices! ​

If you are not sure whether you need to pay VAT or not, you should seek advice from an accountant who can help you understand your tax obligations (such as Beany).​

You can only claim a deduction for expenses that are ‘wholly and exclusively’ related to the trade, i.e. incurred as a result of your influencer or content creator business. This may include: ​

Essentially, you can claim any costs you have incurred in relation to your business. However, you can’t claim expenses that have a ‘private’ nature - for example a finance Youtuber won’t be able to claim gym memberships. Take a look at HMRC’s full guidelines here. ​

You can file your self assessment tax return yourself (however hiring an accountant can be a wise idea!). An experienced accountant knows the latest tax rules, can help you understand the nature of income you earned, minimise tax responsibilities and prepare and file your tax return. ​

Our number one tip: keep good records. Keep your tax invoices, bank statements, receipts, and contracts. This way, you’ll have the necessary documents when you need them. HMRC requires sole traders to keep records for at least 5 years, and companies must keep records for at least 6 years. ​

As a content creator, hiring an accountant might not be a priority. However, an experienced accountant can prove invaluable when dealing with your accounting and tax needs, such as staying compliant, tax preparation, tax filing, and minimising your tax liabilities. With the right accountant in your corner, you’ll be free to focus on what you do best - creating content that rocks!​

We understand accounting and tax can be overwhelming - and we are here to take the weight off your shoulders. Beany's certified accountants and friendly team can help you manage your accounting and tax needs. We carefully interpret and apply tax rules to enable you to stay compliant and pay the least amount of tax legally possible.​​

Our expertise comes without the jargon and is designed to help you save both time and money. To find out more about how we can help, book a call with one of our team members or get started for free today.​