Tax on Influencers
In terms of what influencers should declare to HMRC, this is relatively straightforward – for the most part. In short, when you are paid money to promote a product or brand, you need to declare it as income and pay tax on it. Conversly, when you spend money carrying out that promotion, you can claim it as an expense to reduce your tax bill. So costs like software, telephone and broadband expenses, advertising costs, management fees and travel costs are all allowable (so long as they pass the “wholly and exclusively” test).
The one difficulty influencers may face when working out their taxable income is when they receive payments in kind. This is when a brand pays you wholly or partly with goods or services. For example, if you were a fashion blogger and someone wanted you to promote their jewellery and, in return let you keep what they sent you, you would be expected to pay tax on the value of that jewellery. To my mind, this should be valued at the brands actual cost of the goods/services as that is the expense that they will end up claiming on their side. But, it’s easy to see how a relatively successful influencer could end up accumulating a significant tax bill without ever being paid in cash.
There is one important exception to this however. If a brand sends an influencer goods unsolicited, in the hope (but not the guarantee) that the influencer will show it off on Instagram, Facebook, Tik Tok etc, then there is no liability. There was no agreement between the influencer and the brand for exchange of services and so it’s not taxable.
I would suggest that for all paid work (paid in cash or otherwise) you should have a written agreement with the brand and, where payment is made in goods or services, the brand should state their value in the agreement.