HMRC’s crackdown on social media influencers

In recent years, HMRC has been cracking down on social media influencers who are not paying the correct amount of tax. HMRC has sent “nudge letters” to thousands of influencers, reminding them of their tax obligations. HMRC has also investigated a number of high-profile influencers for tax evasion.

Social media influencers are people who have a large following on social media platforms like Instagram, TikTok, and YouTube. They use their platform to promote products and services to their followers. In return, they receive payment from brands, either in cash or in kind (such as free products or services).

HMRC, or Her Majesty’s Revenue and Customs, is the UK’s tax authority. It is responsible for collecting taxes and duties on behalf of the government. HMRC views social media influencing as a business activity, and therefore, influencers are required to pay tax on their earnings.

What counts as taxable income for social media influencers?

Any income that a social media influencer receives from their online activity is considered taxable income. This includes:

• Payments from brands for sponsored posts, product reviews, and other promotional content.
• Affiliate marketing commissions.
• Income from subscription services.
• Income from ticket sales to events.
• Income from selling merchandise.

Even if an influencer receives a product or service for free in exchange for promoting it, the value of the product or service is still considered taxable income.

What expenses can social media influencers deduct from their taxable income?

Social media influencers can deduct any expenses that are incurred wholly and exclusively for the purposes of their business activity. This can include expenses such as:

• Equipment costs (e.g., cameras, computers, editing software)
• Travel costs
• Accommodation costs
• Marketing costs
• Website hosting costs
• Social media advertising costs
• Professional fees (e.g., accountant, lawyer)

How do social media influencers pay tax?

Social media influencers are required to register for self-assessment with HMRC if their gross income is more than £1,000 per year. Once registered, they will need to file a self-assessment tax return each year, declaring their income and expenses.

Social media influencing is a growing industry, and many influencers are earning significant amounts of money. However, it is important to remember that social media influencers are required to pay tax on their earnings. HMRC is taking a close look at social media influencers, and those who are not paying the correct amount of tax could face penalties.

How can Jeremy Gordon help?

We provide expert tax compliance advice and litigation; if you have received a “nudge letter” from HMRC then you should act immediately on it and seek legal advice.