‘A Day in the Life’, ‘Get Ready with Me’ and ‘What I Eat in a Day” are phrases now synonymous with the world of social media influencing. Whether your interest be in sport, gaming, beauty or lifestyle, a few minutes on Instagram, TikTok or YouTube will gather a host of targeted content to choose from.

Where we once saw traditional celebrities endorsing products off the back of their own fame – cue Gary Lineker enjoying a packet of Walkers cheese & onion – now we see everyday people building lucrative careers for themselves in influencing.

For many, the career might seem like a mixture of attending product launches, receiving valuable PR packages, travelling for free and simply giving your opinion in exchange for reward. Yet in reality, influencers are subject to the same old taxation and reporting obligations as the rest of us.

Currently, there is no such thing as an Influencer Tax but there are still tax implications attached to the role. In fact, the rise of the influencer has exposed several grey areas around the taxation of brand deals, paid partnerships, gifts, reviews, and other services content creators are engaged for.

With millions of internet users browsing social media platforms for entertainment, inspiration, reviews and product recommendations, the earning potential in the industry is vast and shows no signs of slowing down.

In the most part, where an influencer satisfies the conditions to be deemed trading by HMRC, they will be considered to be self-employed, so must complete their annual income tax return, and will also be subject to national insurance contributions depending on their level of earnings. As sole traders, the obligation to register as a self-employed individual with HMRC is their own responsibility and must be done no later than 6 October following the end of each tax year to avoid hefty penalties.

Influencers are also responsible for maintaining details of their own income and expenditure. This is straight forward when it comes to cash, but in a profession that often involves gifting of products, PR packages and brand trips, the difficultly lies in determining whether something is income or a gift, and content creators are likely to fall foul of the regulations if they get it wrong.

If an influencer is deemed to be trading, receiving cash payment in exchange for a paid post or advertisement qualifies as earnings and as such will be taxable in full. What’s often unclear, however, is when no cash is exchanged but a person is sent products in exchange for review or advertisement.

Even if no cash is exchanged here, the value of the product being reviewed is considered earnings if the influencer promotes it or discusses it on their platforms. In these cases, known as barter transactions, the existence of a contract usually indicates an obligation to promote the product or service, therefore its value will be taxable. Where gifts received can be exchanged directly for cash, such as treatments, hotel stays and tickets to events, they will more than likely be taxable. There are, however, exceptions to this general rule – for example, if the gift received is non-transferrable, no tax liability will arise on its value.

That said, we are seeing more and more brands sending products, free experiences like a meal out or weekend away, or free passes to an event as a gift with no obligation to post. While this has no tax or national insurance obligations, the second an endorsement is made, even in the absence of a contract, this may become taxable.

These gifts, and all other sponsored or paid for content shared by social media influencers is subject to another set of regulations set by the UK advertising watchdog, the Advertising Standards Authority.

So, while it is a career that many might view as glamorous, flexible, and highly profitable, there is a business to be operated behind the scenes. As well as having contracts for their work in place, content creators should seek professional advice on their taxation liabilities.

To discuss any aspect in more detail get in touch with Ciara Mallon Tel: 028 9032 3466 Email: ciaramallon@bakertillymm.co.uk