Time to read – * min

Tax Implications for UK Creators: HMRC’s Wake Up Call and How Gigapay Can Help

Learn about the tax implications for online content creators and marketplace traders. HMRC's latest crackdown could affect those unaware of their tax obligations. Find out more here.

Mário Sérgio Rodrigues
February 2023
Creator Economy

HM Revenue & Customs is sending letters to thousands of online content creators, gamers, and social media influencers suspected of not paying the correct amount of tax on their earnings. This move is part of the UK tax agency's latest efforts to keep pace with the rapid growth of the digital economy. HMRC plans to send 2,300 letters to online content creators who earn money or receive gifts for posting material on platforms such as Instagram, TikTok, and YouTube. It also plans to send 2,000 "nudge" letters to individuals who sell goods and services through online marketplaces such as eBay, Facebook, and Etsy.

Online content creation and marketplace trading have boomed in recent years, with a study by Adobe finding that the number of content creators in the UK had doubled to around 16 million between 2020 and 2022, with 65% doing so as a side hustle. However, many people are unaware of the tax they owe on their online earnings, especially those in their teens and twenties. The report found that around 2.8 million UK influencers earned an average of £120 per hour.

Jessica Narweh, a 25-year-old business coach and influencer who previously trained as a tax adviser, said many young people, especially those without other employment, think they do not need to report earned online income until it exceeds the income tax-free allowance, which is currently £12,570 a year. In fact, online income above the £1,000 tax-free trading allowance must be reported. People also often do not realise that the tax position for UK-resident content creators is the same regardless of where in the world their revenue is sourced.

A potential solution to this problem is Gigapay, a platform that enables businesses that engage a high volume of creators to meet their tax obligations, while helping them to receive the payments instantly. Gigapay completes tax reporting on behalf of the business, making it easier for the government to understand the taxable income earned by creators, reducing some of the heavy lifting for both the business and also the government. 

This content is built on top of the FT article “ HMRC chases 4,300 social media influencers and online earners over tax”.

Ready to start using Gigapay?