With companies increasingly using ‘social media influencers’ as part of their marketing strategy – and millennials often appearing to regard it as a genuine career option – it is sensible to consider what tax implications arise for individuals and companies in this regard. As with most things involving taxes in the UK, there isn’t necessarily any simple answer from a tax point. However, there are a number of factors which both individuals should consider in this regard.
Firstly, from an individual perspective, is it important to consider whether one is actually trading as a business? That is, for example, specifically developing a social brand with the aim of making income in this area?
Or is something purely a small-scale hobby? If it is the latter, you have no problem – activities from hobbies are not innately taxable. However, as one can imagine, it is easy for something which is initially just a hobby to become something more substantial over time. Moreover, it is often difficult to assess at exactly what stage something which was purely a hobby done for fun has become a business, so people should take care in this regard.
However, if one has established a clear social media presence as a ‘business’, you will be regarded as self-employed by HMRC and liable to Income Tax and NICs on the money you receive from your activities. This can include direct payments but also ‘payments-in-kind’ (i.e., products etc. which you can use or sell), even though you are not legally an employee of the business which paid you or supplied the product.
In some cases, social influencers may be able to avoid a tax liability, if the product supplier has agreed a ‘Taxed Award Scheme’ (TAS) with HMRC. In that scenario, the liability for tax and NICs has been ‘taken over’ by the producer and you do not have to declare that payment or product as your taxable income.
Would you like to know more?
As this is a complex area and something which HMRC is increasingly interested in, those social influencers who are receiving such benefits – or indeed, the companies providing them with payments or products – should look at contacting their regular Blick Rothenberg contact or Fiona Fernie or Robert Salter, whose details are listed on this page, if they have any concerns.