Being sent products from brands?
You may have heard of influencer ‘unboxings’, where an online creator films themselves opening a luxury handbag, or top of the line gaming equipment, to share with their followers.
When does an influencer need to declare these gifts in their business accounts? Should you be keeping records of gifts received and the reason these have been received? At what point do these gifts constitute taxable income?
What are payments in kind?
Payments in Kind are the use or the receipt of a good or service, instead of cash. This can include smaller gifts like receiving the newest line of a make-up product, latest gaming equipment, and the newest protein powder.
Larger gifts can include those often-viral luxury car gifts, a new-build home or a luxury holiday. However, it is difficult to know when a gift if simply a gift, and when it becomes taxable income.
Are your gifts tax compliant
As we are consuming more social media content than ever, brands have increased marketing budgets to gift items, or even holidays, to influencers and online content creators. As influencer gifting gets more and more elaborate and we see influencers with a modest following also receiving gifted items, we are seeing HMRC taking an increased interest on those who derive an income online.
An added complexity to this is how readily available and visible this information is for both HMRC and the general public to access with gifting hauls on most online platforms.
It is key to get the tax treatment right from the early stages of growing an online presence. Our experienced tax advisers can help you navigate these complexities, allowing you to focus on growing your audience. Early involvement enables us to advise on managing your business tax-efficiently. We’re available for an initial discussion on how we can support your accounting and tax needs.
Our Tax Disputes and Disclosures team specialise in correcting historic tax issues and so can provide expert advice if income has not been reported in the past when it should have been. For more information on correcting the past see our article here.
When is this taxable income?
Self-employment profits can be distorted when influencers receive products or experiences instead of cash payments, as the line between personal and business use can be unclear. Often, influencers receive PR packages without prior agreements, raising the question: does creating content around these gifts make it part of a business venture?
Gifts typically count as income unless based on personal appreciation. In most cases, gifts are considered trading income, especially if repeated, from unfamiliar brands, or come with an expectation of content. HMRC often assumes repeated endorsements imply trade, making clear communication with brands essential. Keeping records of brand interactions and agreements is key to managing tax obligations.