10 min read
What is a Self Assessment tax return (SATR)?
Self Assessment tax return is a process where you declare your income and expenses to HMRC. Whether you are a self-employed digital content creator or have registered yourself as a limited company or a freelancer, you are liable to fill out tax returns.
When do you need to submit a self-assessment tax return?
- If your trading income from influencing activities surpasses £1,000 within a tax year. This encompasses earnings from sponsored posts, brand partnerships, affiliate marketing, and other income generated through your online activities. It also includes the value of any items you are gifted and which you are expected to promote – essentially a ‘benefit in kind’ – something that is received as payment for undertaking something in place of a cash payment.
- If you have received income from a source where tax has not been deducted at the source, such as rental income.
- If your capital gains exceed the annual exemption limit.
- If you have outstanding tax obligations, including National Insurance contributions.
Steps to filing your Self Assessment tax return
Now you know you need to submit a Self Assessment tax return, you might be wondering how to do it. We have described the steps to file your tax return in detail below:
1. Register for self-assessment
If you are not registered with HMRC, the first step will be going to the HMRC website and registering for Self Assessment as soon as your earnings exceed £1,000 within a tax year. You’ll receive a Unique Taxpayer Reference (UTR) number.
2. Gather your records
Keep detailed records of all income generated from influencer activities, including collaborations and sponsorships, as well as business-related expenses such as equipment, software, and travel for content creation, with you. Retain all relevant emails, invoices, transactions, and receipts.
3. Calculate your income
Include all influencer income received throughout the tax year, whether in cash or gifts. It is important to note that gifts with a monetary value are subject to taxation.
4. Claim deductions
Reduce your taxable income by claiming permissible business expenses (described below) incurred during the content creation process.
5. Complete your tax return
You can submit your Self Assessment Tax Return (SATR) online via the government portal. HMRC offers resources to assist with the completion of the form.
6. Pay your tax
Once your tax return is submitted, you’ll receive a tax bill. You should complete the tax return and pay any tax due by the deadline (January 31st following the tax year you have provided the data for) to avoid penalties.
Allowable business expenses for influencers
- Marketing expenses – costs associated with website development, hosting services, pay-per-click advertising, and online search engine optimisation.
- Equipment – purchases of laptops, computers, cameras, mobile phones, software, and subscriptions.
- Insurance – coverage for your equipment.
- Travel and mileage expenses – costs for airline and train tickets, work-related fuel expenses (excluding travel to your regular workplace), accommodations away from home, and your primary work location.
- Subsistence – expenses for food, beverages, and entertainment under specific conditions.
- Home office usage – if you conduct work from your residence.
- Utility expenses – phone and internet costs incurred while working from home.
- Subcontractor fees – payments to photographers, consultants, or other freelancers you engage.
- Professional fees – costs for agents, accountants, or legal services
- Recording and licensing fees – expenses for utilising professional studios or backing tracks for your content
- Make-up, hair, and clothing – items used for business-related photo or video shoots
- Bank fees – charges associated with a business bank account
Additional tax considerations for influencers
1. Filing for VAT
You only need to register for VAT if your annual turnover exceeds £85,000 (as of April 2024).
2. National insurance contributions
Class 4: If your profits exceed a higher threshold of £12,570 a year, you might also be obligated to pay Class 4 National Insurance contributions.
3. Capital gains tax
4. Income tax
The rate of income tax you pay depends on your total taxable income. You’ll need to pay income tax if you earn more than the personal allowance. For the 2024/25 tax year, the basic rate is 20%, the higher rate is 40%, and the additional rate is 45%. Income tax will apply to any earnings exceeding the £12,570 threshold.
Seek professional help
As an influencer, it is essential to have a clear understanding of your tax regulations and to comply with them. By following the guidelines mentioned above, you can ensure that you declare your financial position and pay any tax amounts on time, thus avoiding penalties. However, if you still need professional help, our tax accountants can make you stress free by handling your SATR. Book a free consultation with us to learn more about our tax services. At Golding, we are more than happy to hear your doubts and provide tailored solutions.
