While being a professional influencer is the kind of job that no-one would have thought of a decade ago, the realities of legal and tax compliance of that industry are the same as for the rest of us.
You may be concentrating on growing audiences and building relationships with brands and sponsors, but behind all that, you’re running a business, and with that comes the responsibility of understanding and fulfilling your tax obligations. Navigating the ever-evolving world of influencer taxation can feel overwhelming – there’s plenty to know…
Know Your Status: Sole Trader or Limited Company?
Firstly, identify your legal structure. Most influencers operate as sole traders, but as your income and business complexity grow, incorporating a limited company might be beneficial. The quickest way to deal with this is to chat with us to assess your specific situation and choose the most tax-efficient path.
Registering for Self-Assessment: The £1,000 Threshold
If your earnings from influencing (excluding personal gifts) exceed £1,000 in a tax year (April 6th to April 5th), you must register for Self-Assessment and file a tax return by the following January 31st. Even if you fall below the threshold, registering early can benefit you later.
Keeping Accurate Records: Your Financial Lifeline
From sponsored campaigns to merchandise sales, document everything! Maintain meticulous records of income, expenses, VAT (if applicable), and business bank statements. This transparency ensures accuracy in your tax return and simplifies potential HMRC inquiries.
Understanding Expenses: What You Can Claim?
You can deduct reasonable business expenses from your taxable income. This includes things like:
- Equipment (cameras, editing software)
- Travel for sponsored events or content creation
- Advertising and marketing costs
- Agency fees
- Training and development courses
- Subscriptions to relevant platforms
Remember, keep receipts and invoices as proof for HMRC.
VAT: Are You Above the Threshold?
If your taxable turnover exceeds £85,000 in a 12-month period, you must register for VAT. This means charging VAT on your taxable goods and services, filing quarterly returns, and paying VAT to HMRC. Consult an accountant if you’re unsure about your VAT liability.
Making Tax Digital (MTD): The Future is Digital
From April 2024, businesses with a turnover above the VAT threshold must keep digital records using MTD-compatible software. This allows for more efficient submission of your tax returns. Familiarise yourself with MTD requirements and choose the right software to stay compliant.
The best way to keep on top of all this is to stay informed. Even better, and we would say this, is to get someone to stay informed for you – someone who understands the world you work in.
Get in touch for a chat and we can help make sure you’re on the right path and keeping track of the deductions you can make, and the tax you can save. We can help you stay compliant and maximise your income so that you can keep on creating and collaborating.
