Entertainers and Creatives: Income from Influencing and Content Creating

Introduction

The digital economy has transformed how individuals generate income. Influencers and content creators have the ability to earn income from several avenues, from sponsored posts and affiliate marketing to digital product sales and platform revenue. The opportunities within this sector are diverse and continuously evolving and it is crucial that influencers and content creators understand and manage their tax obligations effectively.

This briefing note provides an overview of the general tax rules applicable to influencers and content creators who operate their business in the UK. It does not cover all aspects of this complex area and should be considered alongside professional advice.

Hobby vs trade

A fundamental distinction for tax purposes, particularly for those starting out in content creation, is whether the activities constitute a “hobby” or a “trade”. HMRC look to the badges of trade[1] when determining whether an activity constitutes trading, which broadly means an activity carried out with a view to making a profit, demonstrating a degree of regularity and commerciality. Hobby activities that generate income but fall short of trading may instead be taxable as miscellaneous income. A £1,000 tax-free trading allowance can be applied against trading income and/or miscellaneous income instead of deducting actual expenses.

For influencers and content creators, the line can often blur, especially in the early stages. As soon as there is a clear intention to generate profit and a commercial approach to influencing and content creation, the activities are likely to be considered a trade. It is important to consider if the income generated, whether considered miscellaneous or trading income, triggers the tax obligations discussed in this briefing note.

Sole trader vs limited company

Influencers and content creators typically operate either as a sole trader (self-employed) or through a limited company. Sole traders are personally responsible for business debts, and business profits are subject to income tax and National Insurance Contributions (NICs), which are reported and paid through the annual Self-Assessment tax return. Income tax rates currently range from 20% to 45% in England, Wales and Northern Ireland and 19% to 48% in Scotland. Rates are applied according to the tax band into which income falls and are applied to income in excess of the available personal allowance (up to £12,570).

For limited companies, the business is a separate legal entity, offering limited liability to its directors. Company profits are subject to corporation tax, currently 19% for profits up to £50,000, increasing to 25% for higher profits. Funds can be extracted from a limited company through a combination of salary and bonuses (subject to income tax and NICs, which are collected through PAYE) and dividends (subject to UK dividend tax rates of 8.75% to 39.35%, depending on income level). This often provides flexibility for higher earners, though it involves more administrative complexity and costs.

The most effective structure for an influencer or content creator is highly individual, depending on factors such as their need for immediate access to earnings, the presence of other income sources and the associated administrative time and costs.

Income streams and tax treatment

Income generated from activities as an influencer or content creator is generally taxable as trading income. This includes, but is not limited to, revenue from sponsored posts, affiliate marketing, advertising income, subscriptions, and brand collaborations. Importantly, where goods or services are exchanged without money changing hands (e.g., receiving free products in exchange for promotion), the fair market value of the goods is also considered taxable income. Similarly, "gifts" received from brands, if provided in exchange for promotional activity or other service, or with an expectation of it, are typically treated as taxable income. It is important to consider in each specific case whether a genuine “gift” has been made, and accurate valuation and record-keeping for these non-cash transactions is essential.

Deductible expenses

For both sole traders and limited companies, expenses can be deducted from taxable income if they are incurred "wholly and exclusively" for the purpose of the trade.

It is especially important for influencers and content creators to be aware of the "duality of purpose" rule. An expense cannot be deducted if it serves a dual purpose and “there is no objective yardstick by which any trade element can be distinguished from the non-trade element[2]”, meaning it has both a business and a personal purpose that are not easily distinguished from one another. For example, a holiday that includes some content creation elements will generally not be fully deductible if its other purpose is personal leisure.

It is important to keep detailed records of all expenditure, including receipts and invoices. Clearly demonstrating a sole business purpose is essential to justify these deductions to HMRC.

Making Tax Digital (MTD)

For several years HMRC have been in the process of transforming their systems with a view to modernising their management of data and taxpayer interactions for the digital age. The project is known as Making Tax Digital (MTD) and encompasses different taxes and several processes, which were first consulted on in 2016. Some elements of the plan are already in place (e.g. MTD for VAT).

MTD for Income Tax (ITSA) requires digital record keeping by obtaining software that is compatible with HMRC’s system, and quarterly digital reporting of receipts and expenses in respect of trading businesses (including those from influencing and content creating) and property businesses that are subject to income tax, subject to certain exceptions. MTD for ITSA will begin on 6 April 2026, but the start date will be later for some affected taxpayers.

In the initial phase from April 2026, only individuals with over £50,000 of business receipts will be mandated to enter the regime. From April 2027, this will be extended to those with business receipts of more than £30,000. This threshold will be lowered to £20,000 from April 2028.

It is essential for individuals with income from influencing and content creating to be aware of these changes and to stay ahead of their reporting obligations.

VAT

Businesses must register for VAT if their "taxable turnover" (the total value of everything they sell that is not exempt from VAT) exceeds the VAT-threshold, which is currently £90,000 in a 12-month rolling period. Once VAT registered, VAT must be charged on taxable supplies, but VAT paid can be reclaimed on business expenses.

For influencers and content creators, it is especially important to carefully consider the VAT treatment of potential gifts and barter transactions and include the value of these when considering whether the threshold to register has been breached.

Compliance with MTD for VAT is mandatory for all VAT-registered influencers and content creators. This means that VAT records must be kept digitally, and VAT returns must be submitted to HMRC using MTD‑compatible software.

Record keeping and HMRC enquiries

Maintaining organised records and receipts for income and expenses is important for accurate tax reporting and to support tax return entries if HMRC raise an enquiry. HMRC enquiries can range from a simple check of a specific entry on a tax return to a full investigation of all business records and financial transactions. While some enquiries are random, others may be triggered by discrepancies in submitted returns, unusual figures, or specific campaigns targeting certain sectors.

Sometimes, HMRC send “one-to-many letters”. These letters are sent to numerous taxpayers who share commonalities, such as the same type of business activity. They are not formal enquiries, but responses should be carefully considered as an enquiry may follow if HMRC believe that tax has been underpaid.

Should an influencer or content creator receive notification of an HMRC enquiry or a one-to-many letter, it is crucial to respond promptly and accurately. It is prudent to seek professional tax advice upon receiving an enquiry notice or one-to-many letter, as if significant errors or undeclared income is found, or there is failure to co-operate, there may be additional tax due and potential interest and penalties levied.

Key dates

For sole traders, an online self-assessment return is due by 31 January following the end of tax year, which runs from 6 April – 5 April. For example, the return for the tax year 6 April 2024 - 5 April 2025 is due by 31 January 2026.

Individuals who need to file a tax return but who are not registered for self-assessment must notify HMRC of their need to file a tax return by 5 October following the end of the tax year.

Limited companies have different deadlines. Typically for private limited companies, annual accounts are required to be filed with Companies House and a tax payment made to HMRC 9 months and 1 day after the accounting period ends. A tax return would then need to be filed 12 months after the accounting period.

It is important to review and understand the responsibilities that a director of a limited company is required to undertake and consider any additional filing deadlines imposed by Companies House.

Find out more…

This note reflects the law in force on 29 October 2025. Changes may be made before enactment. It does not cover all aspects of this subject. If you would like to find out more please contact your usual Deloitte contact or, if you do not have one, please contact Meghan Watt (meghwatt@deloitte.co.uk).

For further information visit our website at Entertainers and Creatives | Deloitte UK.

[1] For further details on the badges of trade please see HMRC Business Income Manual 20205

[2] As per guidance in HMRC Business Income Manual 42105