The UK tax system has always been complicated if you’re earning outside of the "regular" PAYE framework - especially for content creators.
But it's about to get more confusing:
HMRC (His Majesty’s Revenue and Customs) are about to send over 4,000 letters to online content creators, gamers, and social media influencers. Because it suspects they haven’t paid the correct tax on earnings from their online activities. Are you one of them?
Who counts as content creators?
Social media influencers/content creators have built a reputation for their knowledge and expertise through social media.
They create a large audience and earn revenue in many different ways. Often by partnering with brands to promote products or services to their many followers. The income they earn can be in the form of money into their bank account, free products or discounts.
What is HMRC doing?
HMRC want to make sure all of these creators pay what they owe.
They’re in the process of sending letters to over 2,000 content creators who:
Receive gifts from businesses in exchange for promoting their products (yep - gifts can be taxed!)
Earn money through the amount of engagement their content gets
The platforms these creators use to make money include:
HMRC will also send over 2,000 "nudge" letters to those who sell goods and services through online marketplaces like:
to remind them to pay what they owe.
A bit about content creation
Selling on online marketplaces and content creation have grown significantly in recent years - in terms of revenue and the number of people involved.
According to the Financial Times, there are over 16 million content creators in the UK. And there are 2.8 million influencers earning around £120 per hour on average - a very significant amount.
Many of those involved in this way of making money are unaware of the tax implications of these kinds of activities.
This article can help you work out whether or not content creation is right for you. Including other aspects of creating content in addition to the tax side of things.
So - what taxes do content creators need to pay?
Social media influencers have to pay tax on their income just like anyone else. In the UK, you should register with HMRC and complete a self-assessment tax return if your gross income is more than £1,000 - which is known as the tax-free trading allowance.
To break that down: if you earn over £83.33 a month outside of jobs, you’ll need to complete a self-assessment tax return.
Influencers may also owe capital gains tax if they generate a profit worth over £12,300 selling second-hand items. This allowance is being cut to £6,000 from April 2023, so it’s a good time to brush up on your tax knowledge.
Potential risks if you’re creating content on OnlyFans
OnlyFans is a platform many have used to create content online and earn some extra money alongside their studies.
But there are lots of potential risks involved with using this platform. If you are (or are considering) creating content on OnlyFans, make sure you’ve read this blog so you’re fully informed about the potential downsides.