HMRC has issued a warning to microinfluencers and those with side hustles, alerting them to the possibility of receiving an unexpected £100 fine. According to the Birmingham Mail, many people are unaware of their obligation to declare side earnings, which can include income from content creation, sponsored posts, or even gifts from brands.
The rules around these extra sources of income can be confusing, and failure to report them correctly could lead to hefty penalties. Understanding the full scope of these obligations is essential to avoid fines and ensure you are compliant with tax regulations. Here’s what you need to know.
The £1,000 Threshold: What Counts as Side Income?
HMRC’s rules are relatively simple: if you make more than £1,000 in a tax year from side activities, you’re required to declare that income. Whether you’re a microinfluencer earning money from sponsored content, receiving gifts from brands, or running an online shop, these earnings are considered taxable.
As Mitch Hahn, the boss of Nordens, a firm specializing in influencer accounting, explained:
If you earn from influencing alongside other jobs, HMRC looks at total income.
This means that even if you’re only creating content part-time, it all counts toward your total earnings. If you exceed the £1,000 threshold across all your side hustles—whether it’s from content creation, selling products, or other activities—you’ll need to report it.
For example, if you earn £800 from sponsored posts and £500 from selling handmade jewelry online, that totals £1,300, which means you’re obligated to inform HMRC. These side earnings could also push you into a higher tax bracket, something you may not have anticipated.
Gifts Aren’t Always Free: Tax Implications of Receiving Products
It’s not just cash payments that can get you into trouble—gifts from brands and companies also count as taxable income in some cases. When you receive products in exchange for content, or if a company gives you freebies to promote their brand, you might think it’s just a perk of the job. However, HMRC considers these gifts as taxable, and if you’re not careful, they could push you past the £1,000 limit.
Hahn goes on to say:
But, even for those getting money from content creation on the side, these earnings could make you liable for tax, with gifts you receive from brands potentially being part of your tax obligation.
So, even if you’re not receiving direct payments, the value of the products could still count as taxable income.
For instance, if you’re sent a £200 gadget to review on your blog, HMRC might see it as payment in kind, meaning it should be declared. And if you get several items like this in a year, they could quickly add up to more than the £1,000 tax-free allowance.
HMRC’s £100 Fine: What Happens If You Miss the Deadline?
HMRC is strict about deadlines, and missing them could result in a £100 fine. HMRC warns:
If we find that you needed to pay tax on your income, but you didn’t tell us about it, you may be given a penalty. HMRC also charges interest on any late payment of tax – so the longer you put off paying, the more you may owe.
The deadline for submitting your online tax return is January 31st at 11:59 PM, and this is crucial. If you don’t meet this deadline, you’ll automatically face the £100 fine. And if you continue to delay or fail to pay the tax owed, you could incur even larger penalties over time.
It’s also worth remembering that HMRC will apply interest to any unpaid taxes, so the longer you wait, the more you could end up owing. As a result, it’s important to keep track of all your earnings, even those from side hustles or content creation, to avoid any surprises at the end of the tax year.
