The influencer industry has exploded over the past few years. Influencer marketing continues to exhibit exponential growth, with the industry’s estimated market size reaching $32.55 billion by 2025, compared to $24 billion in 2024.
Influencer ad expenditure has more than tripled, reaching £917 million at the end of this period in the UK alone.
HMRC is aware that many influencers and online creators don’t pay sufficient tax or any tax at all. They recently sent ‘nudge letters’ to thousands of online traders, gamers, and social media influencers whom they suspect of tax evasion.
So, whether you’re earning thousands or just starting out, understanding your tax obligations keeps you on the right side of the law.
This guide walks you through everything you need to know about influencer tax obligations, from determining when you need to register for self-assessment to understanding the tricky rules around gifted products and maximising your allowable expenses.
When Do You Need to Register for Self-Assessment?
Every influencer asks this question first: Do I actually need to deal with HMRC? It depends entirely on how much you’re earning from your influencer activities.
If your self-employed income stays below £1,000, you don’t need to pay tax on these earnings or report them to HMRC. There is a £1,000 trading allowance threshold, which allows you to earn up to this amount tax-free without any paperwork.
If you earn more than that, you’re legally required to register for self-assessment and report your earnings.
Whether or not you’ll be taxed depends on your total income from all sources. If your combined income (employment, self-employment, other income) exceeds your personal allowance of £12,570 (set for everyone in the country), you’ll pay tax on the amount above this threshold.
Here’s where many influencers get caught out, though. Gifted products or PR items count towards that £1,000 threshold.
Accept a £500 sofa in exchange for creating an Instagram Reel? That’s £500 of income. Even without cash payments, the value of PR packages and gifted items can quickly push you over the line.
Once you exceed £1,000 in total income from influencer activities (including gift values), you need to register for self-assessment. The registration deadline is 5 October in the second tax year of your business. So if you first exceeded the threshold in the 2024-25 tax year, you’d need to register by 5 October 2025.
Once registered, you’re treated exactly like any other self-employed person, following the same rules and deadlines.
Note that some influencers will set up limited companies (with them the owner/founder and director), which puts you into a different tax system than the self-employed.
In the vast majority of cases, however, influencers will register for self-assessment and act as sole traders long before they consider incorporating.
View our guide to registering as self-employed here.
Different Types of Influencer Income
Your income as an influencer comes from various sources, and each one needs proper accounting when calculating your tax liability.
Here are the main different types of influencer income:
- Brand Partnerships and Sponsored Content: Whether you’re paid £500 for an Instagram post or £5,000 for a campaign, all cash payments from brands count as taxable income that must be declared.
- Affiliate Marketing: Every commission counts as taxable income. This covers Amazon Associates, brand-specific affiliate programs, or any other commission-based arrangements. Even small amounts add up over the year.
- Platform Monetisation: YouTube ad revenue, TikTok Creator Fund payments, Instagram Reels bonuses, OnlyFans/Patreon subs, or any other platform-based earnings all count as business income.
- Product Sales: Income generated through your own channels – including merchandise, digital products, courses, or books – is taxable. You’ll need to track both revenue and the costs of creating or sourcing these products.
- Appearance Fees: Events, speaking engagements, or hosting duties are considered taxable income, even for one-time payments.
So long as the income is primarily commercial, it’s taxable, and you can claim expenses against it where applicable.
The Confusing World of Gifted Products and PR Packages
This is where influencer taxation gets really messy. Gifted products and PR packages cause more confusion than almost anything else, and this is where many influencers unknowingly break tax rules.
Not every gift is taxable, but the rules are nuanced. Three things determine if tax is due on a PR gift: the monetary value, the nature of the gift, and the purpose behind it.
- Value Threshold: HMRC has set criteria for taxable PR packages. If the gift is a tangible item worth more than £50 and meets other criteria, it’s subject to tax. Items under £50 are generally not taxable, though other factors still matter.
- Transferable Cash Value: Can you sell the item or exchange it for cash? If so, it’s more likely taxable. Think spa day vouchers or football match tickets. If the answer is yes, it’s probably taxable.
- Purpose and Intent: This often matters most. What was the intention behind the gift? If you’re gifted a PR item worth over £50 with the expectation you’ll endorse the product on social media, it’s classed as a non-monetary payment subject to tax.
Tax treatment here definitely depends on whether you promote the items. Unsolicited products you receive but don’t promote might be considered gifts if given with “detached and disinterested generosity” and could be excluded from income.
But if you do promote the products, they’re almost certainly taxable. So you’d report them on your self-assessment.
Allowable Business Expenses for Influencers
Being self-employed as an influencer has one major advantage: you can claim legitimate business expenses. These must be wholly and exclusively for business purposes, but the range of claimable expenses is broader than many influencers realise.
- Equipment and Technology: This forms the backbone of most influencer businesses. Cameras, smartphones, tripods, lighting, laptops, and any other content creation equipment are tax-deductible. This includes repairs and maintenance costs too. If you use equipment for both personal and business purposes, you can only claim the business portion.
- Home Office Costs: You can claim these if you use part of your home for content creation. HMRC requires you to apportion costs based on the percentage of your home used for work and time spent working there. This covers rent, mortgage interest, electricity, heating, and internet costs.
- Travel Expenses: Often overlooked but potentially substantial. Travelling to brand events, photoshoots, or meeting other influencers for collaboration – work-related travel expenses can be claimed as deductions. This includes public transport, taxis, flights, and accommodation for business trips.
- Software and Subscriptions: Essential for most influencers. Adobe Premiere for video editing, Canva for graphic design, or social media scheduling tools like Buffer – these expenses are tax-deductible. Any tool or software used specifically for business qualifies as a deduction.
- Professional Development: Courses can be claimed too. Investing in courses, workshops, or webinars to enhance your skills counts as tax-deductible. Whether it’s photography, SEO, or social media growth courses, any educational investment that improves your business qualifies.
- Content Creation Costs: Props, costumes, makeup, and other items purchased specifically for content creation can be claimed. Purchasing clothing, props, or other items specifically for photoshoots or sponsored posts may be deductible.
The key is maintaining detailed records and proving expenses are necessary for your influencer business. Keep receipts, note the business purpose, and maintain clear separation between personal and business expenses.
Read our guide on cutting your tax as an influencer or content creator.
VAT Considerations for High-Earning Influencers
As your influencer income increases, you may need to consider registering for VAT.
If your influencer income exceeds £90,000 in a 12-month period, you must register for VAT.
This threshold applies to your turnover, not profit, so it includes all business income before expenses.
VAT registration brings extra responsibilities but also benefits. You’ll need to charge VAT on services to UK clients and submit quarterly VAT returns. However, you can also reclaim VAT on business expenses, which is particularly helpful when making large equipment purchases.
There are some interesting VAT considerations specific to influencers. If businesses gift you items, HMRC considers it a barter transaction. Even without receiving cash, gift values might still have VAT implications.
Many influencers expand their brand by selling merchandise. Whether it’s catchy slogans on t-shirts or bespoke products, if you’re selling goods, you need to account for VAT based on retail prices.
Interestingly, YouTube AdSense income for ads appearing on your videos doesn’t fall within VAT scope.
Sole Trader vs Limited Company Structure
As your influencer business grows, you may wonder whether to continue as a sole trader or establish a limited company. The decision depends on your income level, growth plans, and appetite for extra administration.
- Sole Trader Advantages: Simplicity and lower admin. You register once with HMRC and file an annual self-assessment tax return. All profits are taxed as personal income, and you pay income tax and National Insurance on the full amount.
- Limited Company Benefits: These become more attractive as profits increase, especially if you’re only using a relatively small portion of your salary for daily life and are saving or re-investing the rest.
On the last point, with a limited company, directors can pay themselves a tax-efficient salary, and withdraw dividends taxed at just 8.75% (basic rate) or 33.75% (higher rate). This can save some people thousands, but it depends on their specific situation.
Limited companies also convey professionalism, which helps when negotiating with global brands.
For instance, a beauty influencer landing a luxury skincare collaboration who presents themselves as a registered business rather than an individual often signals reliability, potentially justifying higher fees.
Planning for Tax Payments
Unlike employees who have taxes deducted automatically, influencers need to budget for their own tax payments. This means setting aside money throughout the year rather than scrambling when the tax bill arrives.
A good rule of thumb is setting aside 25-30% of your profit for tax and National Insurance contributions. This might seem high, but it’s better to overestimate than face a shortfall.
If your tax bill exceeds £1,000, you’ll also need to make payments on account, which are advance payments towards the following year’s tax bill. These are made in two instalments, due on 31 January and 31 July. So, be prepared to foot a portion of your tax 6 months after your first bill. It catches people out.
Many influencers find it helpful to set up a separate savings account specifically for tax money, automatically transferring a percentage of each payment received.
Getting Professional Help
Influencer taxation can be tricky, especially as your income grows and diversifies across multiple platforms and revenue streams. Professional help can save you money, ensure compliance, and provide peace of mind.
At Double Point, we understand the unique challenges influencers face. From calculating tax implications of PR packages to maximising allowable expenses and planning for growth, we help you navigate these issues while focusing on what you do best – creating content.
We work with influencers at all stages, from those just hitting the £1,000 threshold to established creators considering company structures. Our team stays current with HMRC guidance and provides tailored advice for your specific situation.
Book a consultation with Double Point today to discover how we can help you stay compliant, minimise your tax liability, and structure your business for sustainable growth.
