Table of contents
Table of contents
If you’re an influencer, then the chances are you’ll sometimes be paid in more ways than just cash. Most influencers receive payments in other formats too, such as free products, brand deals, affiliate commissions, the lot. But here’s the catch; HMRC still want to know about all of it.
In this article we’ll look at the types of revenue influencers may need to pay tax on, and how to record this accurately ready for your tax return.
If your influencer income exceeds the £1,000 trading allowance then you’ll need to report your earnings to HMRC and pay tax depending on how much you earn.
Influencer income is more varied than in most industries – it’s not just about cash payments hitting your bank account. It can include free products, gifted experiences, sponsored posts, and affiliate earnings, all of which need declaring to HMRC.
For example, if a brand pays you £300 for a TikTok, that’s straightforward income. But if they send you a £250 skincare bundle with the agreement that you’ll provide a review, that £250 still counts as income too.
There’s no simple fixed threshold for these other forms of income, either. What matters is whether it’s given in return for promotion or services. If you’re unsure, check with an accountant. Preferably not just one from your comments section though.
We’re so glad you asked. The types of income you should be keeping note of includes:
As an influencer, it’s super important to know what counts as an actual gift, and what is really a payment-in-kind. Because if you don’t, you may end up paying tax on genuine gifts or worse, dodging tax owed to HMRC. They don’t like that.
To break it down, payments-in-kind (PiK) are goods and services given to you instead of money in exchange for an ad or promotional post.
For example, if you’re a beauty influencer, and a brand gifts you one of their latest skincare products in exchange for a post or story then its likely a payment-in-kind, and therefore the value of it is taxable as if it were hard cash.
A true gift is usually voluntary and unconditional. For example, the same brand sends you a lip balm as a thank you for your Instagram post. No expectation required. This is just a gift – nothing more, so no tax is involved.
They can be. We know this feels as straightforward as a circle, but the rule of thumb is that something is generally taxable if:
If you receive products and experience in exchange for reviews or promotion as an influencer, they’ll likely be treated as taxable income – especially when there’s an obligation to post content or if the items are of significant value.
Items should be recorded at their fair market value – that is, the price you would typically pay to purchase them as an ordinary customer.
With everything going digital, using bookkeeping software is advised (and a legal requirement for things like MTD for Income Tax). Let’s say you use software such as Xero, Pandle or QuickBooks, you should record the transaction as follows:
It is good practice to maintain a ‘Gifts Register’ either within your accounting software or as a separate spreadsheet. This should include:
As an influencer you can claim anything wholly and exclusively for business purposes. This includes things like:
When your income comes from everywhere – brand deals, affiliate links, gifted products – it’s very easy for things to get… messy.
Some of the most common slip-ups we see include:
Individually, they’re easy to make. Together? Not so fun at tax time. So how do you avoid them?
These are our top 3 tips for helping you keep your influencer tax affairs in order.
Tools like Pandle (that’s us), Xero or QuickBooks keep everything in one place and do a lot of the heavy lifting for you.
Less chasing invoices, less manual logging, and fewer ‘wait… did I record that?’ moments.
Every time you get paid, move a portion aside for tax. Future you (the one staring at a tax bill) will be very grateful.
If money comes in or goes out – track it. Simple as that.
Spreadsheets can work at the start, but as you grow, you’ll need MTD-compliant software under Making Tax Digital for Income Tax anyway – so it’s worth getting set up early.
Learn more about using Pandle to make business accounting easier. Create an account today and decide what to do with all the extra time you get back.
A creative content writer specialising across business, finance and software topics. I have a love for all things writing, and creating engaging, easy to understand content that helps everyday people!
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