As more and more people use social media to promote products, the tax rules are important to understand. Here’s what you need to know:
Being an influencer
Even if being an influencer or content creator is not your main job, you still have to tell the tax authorities (HMRC) about the money you earn from it. Influencers can be famous celebrities with lots of followers or regular people with a smaller audience. They make money by creating content, promoting brands, and growing their follower count. Sometimes influencers get paid or receive free products in exchange for advertising a brand. They might also sell their own things like music.
HMRC has noticed this growing industry and is sending letters to influencers who might not have reported their earnings. These letters are meant to remind them to pay the right amount of tax. It’s important not to ignore these letters. Influencers might not realize that they need to report their earnings to HMRC. The money they make is usually taxable, and they need to fill out a tax return. Influencers can deduct certain expenses from their income to lower their tax bill. These expenses can include marketing, subscriptions, travel costs, and more. Gifts that influencers receive are also considered income and need to be included when calculating their taxes.
Why VAT may be important to you
If an influencer or content creator sells physical goods or provides services online, they might have to register for VAT. This applies to both selling in the UK and to customers overseas. It’s important to understand the VAT rules and how to account for them correctly when using online platforms or marketplaces.
If an influencer’s turnover from taxable supplies exceeds a certain threshold, they must register for VAT in the country where they make those supplies. This can affect their income after taxes.
If you’re unsure about your tax situation, it’s best to consult a qualified tax adviser. At Cactus Accounting we can help you understand your obligations and communicate with the tax authorities. Ignoring the tax rules, especially after receiving a letter from HMRC, can lead to higher penalties and more serious consequences. Remember, it’s always better to follow the rules and seek help when needed to avoid any trouble with taxes.
______
You can reach out to us across Instagram and Linkedin – @cactusaccounting
Contact [email protected] or check out our website www.cactusltd.co.uk
Software Partners
