Lads and Ladettes, if there’s money to be made online (or anywhere) inevitably there’s someone who wants a slice of your pie, and inevitably online income is not a just a hobby, its a source of income, a side-hustle or even a main source of income for some people. It requires effort, start up costs, time and ultimately this makes it earned income.
Being a blogger, a youtuber, an influencer or a streamer that is earning money is essentially worked time whether this is self employed or through a business. The tax paid on this is very much dependent on how much you’re earning and there are a few get out clauses for low earners.
When do I need to start thinking about paying tax on my blog, YouTube account or side-hustle in the UK?
To start with you will hit a few bumps before you hit good enough traffic to earn income or before you can generate viewers, or even get someone to pay you to push their product, theres no need to worry straight away as HMRC has a limit of £1,000 before you should register as a sole trader.
You can register earlier if you want to prove your income for childcare purposes, or want to pay voluntary Class 2 National Insurance contributions, you might also want to register earlier if you think this could help a mortgage or loan application.
If you are on universal credits you may still need to declare any income to them (speak to them about it) there has been some incentives to register self employed over the past few years such as not having to go to job search interviews however you will need to prove this business is viable.
After the £1,000 limit for registration you may still not need to pay tax on any freelance income.
When will I start paying tax?
If you have no other sources of income UK Residents have a personal allowance prior to paying tax this is currently set at £12,570 in the 2023/24 tax year. So if you are working and doing a side hustle and your main job, employment or business has earnings over the personal allowance you will have to pay tax on the income. The level of tax is dependent on how much you earn anything between £12,570 and £50,270 is taxed at 20% anything beyond this up to £125,140 is taxed at 40%, and finally anything over £125,140 is taxed at over 45%.
Example 1 :-
| So if you earn £10,000 profit form your blog in a tax year and have no other source of income, the income is under the tax limit. So the tax would be £0. |
Example 2 :-
| If you earn £10,000 profit from your blog in a tax year and have a job that pays £10,000, you will be over the tax threshold of £12,570 and therefore will have tax to pay on £7,430 at 20% which would mean your income tax liability will be £1,486 on your additional earnings. |
Of course this is straight if your earnings remain normal however if they get higher you will need to consider paying VAT or even not being self employed and changing your self employment or freelancing hustle to a business.
When do I need to think about VAT or changing to a company?
Well inevitably the VAT limit is currently 85k in the UK and you need to keep an eye on this as you should register for VAT if you know your turnover is going to go over this within the next 30 days for the current period.
Whether you should register your income as something other than being self employed depends on your circumstance and my recommendation would be to speak to an accountant as company directors can use dividends, shares and lower company tax rates to reduce your tax liability. For example basic rate tax on dividend income is currently 8.75% for basic rate tax however the accounts for this can be more complicated and therefore if you’re not confident seeking advice is a must.
What can lower my tax bill?
It’s important to understand when you are talking about income that you may have expenses, to do this the general rule is if you do something that is business related like purchase a camera for your YouTube channel and it’s 100% for business use you can use this amount as an expense to reduce your tax bill, so if the camera is £400 and you earned £1000 the amount paid would reduce the amount you had to pay tax on down to £600.
However if it’s not 100% for business use then you will have to apportion that expense to the amount of time used for personal purposes.
Examples of things you can class as expenses are computers, accounting fees and consumables. Things you obviously can’t claim for are holidays to bermuda, flowers for the other half and the cheeky Friday night takeaway.
What other taxes do I need to consider?
If you are self employed you also need to consider national insurance if you earn over £12,570 which is the same as the personal allowance you will also be required to pay National Insurance the current rates for this are :-
| Class | Rate for tax year 2023 to 2024 |
|---|---|
| Class 2 | £3.45 a week |
| Class 4 | 9% on profits between £12,570 and £50,270 2% on profits over £50,270 |
Which is definitely something you also need to consider as well as if you employ someone else as you may need to declare their income or check they are also self employed.
Should I hire an accountant?
An accountant would say yes, however that’s not always the case if you’re able to do the research or already have some knowledge there’s no reason you should need to. There are loads of useful online tools such as AccountingWeb for advice and Quickbooks to do your accounts easily. Which is easy to start with, just ensure to either keep a log of your earnings and expenses for when it’s time to do your tax return. You will have plenty of time at the end of the tax year and the HMRC give plenty of reminders close to the deadline but make sure you file on time to avoid large fines. If you are completely unclear always seek independent financial advice.
Is there an influencer tax?
There are taxes you need to pay as a blogger, youtuber or influencer, however there is no specific UK tax for being an influencer it’s just treated as normal self employment or business activity.
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Should I pay tax if there’s no income?
Well if there’s no income there’s no tax so do not worry about it, bloggers who write for fun, produce YouTube shorts for a laugh or tell everyone about the cakes they’re using but earn no income do not pay tax what so ever.
Information correct as of the 30th of April 2023.
This article is for information and if your worried about your tax affairs you should seek independent advice.
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