Vlogging: are you paying the right tax on your income and gifts?
Putting YouTube vloggers in the picture
Income tax can be a complex subject at the best of times. But how does it apply to new professions that haven’t existed before?
Video bloggers or ‘vloggers’ are a phenomenon that has seen explosive growth in the last few years. Vloggers provide a video diary of their daily activities. Some of them have amassed a huge following on social media channels, especially YouTube.
If you’re a professional vlogger, you’ll already know that this can be a lucrative profession. For instance, one of the top YouTube vloggers is PewDiePie, with nearly 90 million subscribers. But according to Forbes, the top earner in 2018 was a seven-year-old boy, whose vlog is called Ryan ToysReview, and which made him a mind-blowing US$22 million last year.
In the past, the audience for vloggers has mainly been people in their teens and twenties. However, vlogging is now attracting more widespread interest, especially following the appearance of professional vloggers on reality TV programmes – such as Joe Sugg (ThatcherJoe) on Strictly Come Dancing and his sister Zoe (Zoella) on The Great British Bake-Off.
But if you’re making an income as a YouTuber vlogger, what is the tax situation? And what about ‘free’ gifts from companies that want you to review their products?
Firstly, the potential earning power of vloggers obviously hasn’t gone unnoticed by HMRC. So, if you’re earning money from vlogging, you’ll be subject to taxation as a self-employed person. Most successful YouTube vloggers earn money from adverts (for instance, via Google Adsense), on a pay-per-click or pay-per-view basis. But this must be declared as taxable income on a self assessment form.
There’s no way around this (unless you want to risk subjecting yourself to a painful tax investigation!): you have to pay tax at the same levels as a normal self-employed person: 20% tax for earnings over your personal allowance;40% for earnings over £46,350; and 45% if you earn over £150,000 per annum. There are, of course, ways to structure your payments via other more efficient methods to ensure the maximum tax efficiency. One of our team would be happy to guide you though this, so please feel free to contact us for a no-obligation conversation.
But that’s not the only aspect you need to think about. Free gifts from companies can be a bit of a minefield. If you just receive a gift out of the blue, this could be considered as a ’freebie’. However, if there is any communication between you and a company that means that you’re receiving a gift in return for a review on your vlog, that gift is likely to be taxable as self-employed income. In this case, it would be taxed in accordance with its fair market value (FMV).
Fast forward >>
If you’re a vlogger (or thinking of becoming one) or if you’re in one of the many new professions that are springing up as a result of new technology, you need to make sure that you’ll be paying the correct amount of tax. Axia Media Group specialises in helping people in the creative industries, so give us a call if you’d like a helping hand.