In the UK, many people are earning significant incomes through web services like OnlyFans, YouTube, and Instagram, but the taxman is taking notice of these side-hustles.
According to Adobe, the UK has around 2.8 million influencers who make an average of £120 per hour, and content creators make an average of £110 per hour.
The HM Revenue and Customs (HMRC) is sending out over 2,300 “nudge” letters to influencers and content creators, and a further 2,000 to those who earn significant amounts through eBay, Etsy, and Facebook Marketplace.
The HMRC believes that these digital workers are not intentionally avoiding paying taxes but may not realize that taxes are payable on earnings obtained through social media and other portals.
Those who make a profit from online activities, whether by selling products or services, are legally considered “trading” if their gross income is more than £1,000, and they must fill in a self-assessment form every tax year.
The self-assessment forms can be completed online, but the tax situation can be complicated because many content creators receive benefits in kind, such as gifts from their Amazon wishlists, making it difficult to calculate their exact tax liability.
According to tax specialist Adam Craggs, the letter-writing campaign by the HMRC suggests that there is a “sizeable chunk of income going untaxed from individuals making large sums of money.”
The HMRC receives complete financial information from online platforms like OnlyFans, which itself pays taxes, and fines can be levied for any late payment or deliberate tax avoidance.
Business coach and influencer Jessica Narweh says that many online workers are young, naive, and unaware of the rules. They don’t intentionally avoid paying taxes; they just don’t know they should be paying them. Their main focus is getting followers, and tax is not something that crosses their minds until they see another influencer talking about it.
»UK tax enforcers now targeting people making money online«