UK tax authority nudges net 'influencers': You may owe us for those OnlyFans feet pics
Cue the dawning realization for thousands of content creators
Those pencil-necked desk jockeys at His Majesty's Revenue and Customs (HMRC) are about to give the UK's legions of online "content creators" and "influencers" a rude awakening by reminding them they could owe tax on their income.
Though many people "create content" for simple enjoyment rather than a money-making side hustle, the rise of monetization on platforms like YouTube, TikTok, Twitch, OnlyFans and others has meant that the lucky ones are able to make a living off it.
This could be through subscription fees, donations, sponsorships and gifts, which have the potential to become highly lucrative once the creator has broken through. According to a study [PDF] by Adobe, which makes editing software heavily used by these people, some 2.8 million UK influencers and content creators earned on average $146.86 and $113.19 per hour respectively – the highest in the world.
(Apparently there is a distinction between content creators and influencers, though we're not sure what it would be. Maybe the first actually does something creative and the other stands there holding a product and looking cool.)
But with the field explosively doubling to 16 million in the UK between 2020 and 2022, a side effect of the pandemic, HMRC has caught scent of its favorite snack – unpaid tax.
The Financial Times reports that the tax authority is sending out 2,300 letters to digital content folk to remind them of their obligations and a further 2,000 to those who hawk goods on eBay, Facebook and Etsy.
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However, considering that a large proportion will be young, they're not willfully tax dodging – they're just incompetent.
Tax advisor-cum-influencer Jessica Narweh told the publication: "It's not because they are avoiding tax on purpose – it's because they literally don't know they should be paying it. The main focus is 'how can I get followers?' – I don't think tax even crosses their mind until they see another influencer talking about it."
She put this down to crossed wires over the income tax-free personal allowance of £12,570 ($14,986.46) – the thinking being "I didn't make that much so I don't have to pay tax on it." In reality, online income over £1,000 ($1,192.24) counts as "trading" and is therefore taxed.
Young software developers are also being pursued by HMRC, said Adam Craggs, tax partner at law firm RPC, who had examples of hobbyist teenagers making video games who were soon raking in six figures after selling them online.
"These are very creative, young talented people who are very proficient at programming and have commercialized it – before you know it they are receiving quite sizeable income." He noted that a 21-year-old who contacted RPC had made money from his games since he was 16 and was being chased for five tax years.
Anyone who has had to fill in a self-assessment tax return would understand why such things wouldn't be front of mind for a 16-year-old.
HMRC simply winked: "We believe our customers want to pay the right amount of tax, so we are taking steps to help people do so." ®