I put together this tax guide for UK bloggers and social media influencers because as a Chartered Accountant in my previous life, I know how confusing business registration and taxes can be when you start working for yourself. In this guide, I’ll share some of my knowledge not just about business registration but also VAT, handling expenses and bookkeeping. I’ll also include where you can find additional information to read to help build your knowledge to make better business decisions.
Do You Need to Register Your Blog or Social Media Account as a Business?
For some, blogging and social media is a hobby. It’s just a creative outlet, a way to journal or share their experiences with others. However, for other people, or as a hobby evolves, they start to earn money from it.
From a tax and business perspective, only businesses with the purpose of making money have to register and pay taxes. This is whether they’re online, Instagram, YouTube or a bricks and mortar shop. But, that does mean that if your blog is just a hobby, you won’t need to register with HMRC. If you’re making money, getting paid or planning to start promoting, then most likely you are considered a business.
If you are struggling to decide whether you have a hobby or not, then here are some questions you can ask yourself:
What’s your motivation? Are you hoping to turn your blog into a full-time job one day? And, are you gearing up for your blog or social media account to generate income?
Do you have ad space? Even if you haven’t sold any space, are you aspiring to join Mediavine, intending to sell ad space or have you already implemented something like Adsense, for example?
Have you accepted gifts in return for your writing or promotion? You may not have accepted any cash, but have or would you accept products in return for promotion?
Do you do guest blogging to raise awareness? Are you guest blogging on other sites to raise your profile, increase traffic and promote your brand?
Do you have a monetisation strategy? Blogs and social media accounts take time to create, manage and nurture so naturally you want to monetise to compensate yourself for the time you invest. Have you got a strategy in place for monetising?
If you answered yes to any of these, then it is likely that you are in business as a blogger or influencer and will have some tax obligations.
How to Register as a Business
The quickest and easiest way to register yourself as a blogger or influencer is to apply for self-employment with HMRC. You’ll need to do this once your income (not profit) goes over £1,000 during a tax year (6th April to 5th April). You’ll need to make sure you’ve registered by the 5th October following the end of the tax year you went over the £1,000 threshold.
Even if you are currently not making any money blogging, but have crossed the £1,000 income threshold, you must still register with HMRC and complete a tax return. Although this may feel onerous, completing a tax return means you can record all your expenses to create a tax loss. This can then be used against any money you make in the future and save you tax at this point.
How to Register as Self-Employed
There are other business structures out there including:
- Limited Company
- Partnerships
These may offer you better tax-savings depending on your earnings and protection from creditors, but they often carry more reporting responsibilities meaning you need to engage an accountant.
How to Choose the Right Legal Structure for Your New Business
For the rest of this guide I’ll assume that you are registered as self-employed.
What Counts as Taxable Income When You’re a Blogger or Influencer
When it comes to taxes, usually all the types of income you receive counts of taxable income. That means you’ll need to declare it to HMRC and pay tax on it, after deducting income tax allowances and reliefs as well as your business expenses (more on that later).
As a blogger or Influencer, you may accept gifts or products in exchange for writing about them or sharing them on social media. You’ll need to include these types of transactions as part of your taxable income, valuing each one at market value.
Other types of income you may receive could include:
- Advertising
- Affiliate marketing
- Guest blogging
- Subscription services
Tax Guide Deductions for Bloggers and Influencers
Claiming for allowable business expenses is the easiest way to reduce your tax bill when you’re self-employed. Typically most of the things that you pay for in your business will be tax deductible, for bloggers and influencers that will be things like:
- Website design & build
- Laptop
- Web hosting
- Licences, software and subscriptions
- SEO costs
- PPC
- Photographers
- Make-up for shoots
- Camera and equipment
- Mobile phone
- Consultants or freelancers you hire
- Agents fees
- Training and courses
- Use of home as an office
- Insurance
- Travel and mileage
- Legal fees
- Accountants fees
- Bank charges for a business bank account
There may some expenses you pay for that you use personally and for business, like your mobile phone. In these cases, you can only claim a portion as a business expense. So, say you use your mobile phone for 60% work and 40% personal, then you can claim 60% of the total bills to put against your taxes.
Whilst most things you pay for as part of being an Influencer or Blogger are tax deductible, there are some things you may pay for that you cannot claim against your taxes. This includes things like:
- Fines and penalties eg: parking fines
- HMRC interest and penalties
- Training and courses for new skills
- Food, except in certain circumstances
- Personal expenses
A Guide to Claiming Self Employed Expenses
How to Calculate Your Tax
The amount of tax and National Insurance you’ll pay will depend on how much money is left over after deducting expenses, tax allowances and reliefs.
Income tax starts at 20% on all your income (not just from blogging and social media) over £12,500 and 40% over £50,000. Class 2 National Insurance is paid as a set weekly amount when your earnings go over £6,475 and Class 4 is worked out as 9% on your earnings over £9,501.
When you fill in your tax return online, HMRC will automatically calculate how much tax you owe for you based on the information you enter.
Self-Employment Taxes Explained
Self Assessment for Bloggers and Influencers
As a self-employed blogger or influencer you’ll need to follow the rules of HMRC self-assessment. You’ll need to submit a tax return online declaring your income and expenses once a year by 31 January, as well as paying tax twice a year by 31 January and 31 July.
Keeping Tax Records
As a self-employed blogger or influencer, you are legally required to keep records and paperwork that support all your income and expenses and hold onto them for 6 years. That way if HMRC ever asks how you arrived at the figures on your tax return, you’ll be able to show them evidence.
Your records include things like statements from ad agencies, invoices to your clients and receipts for any expenses you may wish to claim, as well as bank statements.
The simplest ways to keep your records in order and speed up filling in your tax return is to:
- Open a separate bank account so all your payments are in one place and help you budget for your tax bill (take a look at Starling);
- Store your records and paperwork using a secure cloud-based storage system like google drive or Dropbox;
- Set aside time on a regular basis to check all your finances are in order and do your bookkeeping.
VAT
Value Added Tax (known as ‘VAT’) is a tax added to the price most goods and services consumers buy. Only businesses with a turnover of £85,000 or more are required to register for VAT. Once VAT registered, a business must charge VAT to its customers and pay this over to HMRC after deducting any VAT they have paid to their suppliers as well as submitting VAT returns, usually quarterly.