Influencers be warned – free products aren’t always tax-free.
That’s the message from Lee Murphy, managing director of The Accountancy Partnership, as the content creator economy booms.
If you receive a free product or service with the obligation to post about it, you should be paying HMRC, he says.
“It’s considered a form of payment, just not in monetary terms,” says Murphy.
“Influencers are businesses; some people do this as their full-time role.
“Even if the accounts start as hobbies, if you receive any type of gifted product in exchange for posting about it, then you need to treat it as income.
“It’s better to be honest with HMRC as the fines could outweigh what the gifted products would’ve been worth.”
How to work out tax on gifted items
Is it a gift?
If the brand gives you something with absolutely no expectation of promoting it, then it’s not taxable – otherwise, there’s some important admin to do.
Find the market value
“HMRC expects influencers and content creators to declare the normal retail price of the item or service,” says Murphy.
Record and declare it properly
“Keep records of all your gifted items and experiences, similarly to how you would with any cash payments or payslips from a job. You can then add the value of taxable gifts to your income when completing your Self Assessment tax return,” Murphy says.
Deduct allowable expenses
Costs to create the content, such as editing software or transport, may be deducted as a business expense.
Murphy adds that the rise in brand partnerships has blurred the line between genuine gifting and commercial deals, but HMRC is taking notice of this.
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