Since the emergence of TikTok in 2020, countless individuals have ventured into its vibrant digital realm, earning a tidy sum along the way. However, it’s crucial now to accurately report your TikTok-generated income to HMRC or the ta authority of your country, but what counts as Income on TikTok and when do you have to declare TikTok-generated Income?
TikTok, a global leader in short-form video sharing, offers a unique algorithm that catapults your content into the global spotlight. Initially a platform for sharing videos, TikTok has evolved into a multifaceted hub for awareness, shopping, and social connectivity. This evolution has opened up numerous revenue streams for content creators, highlighting the importance of understanding and managing self-assessment tax returns.
If you’re puzzling over how to handle your TikTok finances, we’ve compiled an essential FAQ to demystify your TikTok income, including gifts and promotional earnings.
Do you have to declare TikTok earnings?
Your obligation to declare TikTok earnings hinges on the amount. If your annual earnings from TikTok and similar platforms (like Instagram or YouTube) exceed £1,000 (from April 6th to April 5th), HMRC needs to know. This includes all passive income, not just digital earnings.
Surpassing the £1,000 threshold means it’s time for a self-assessment tax return.
@alithecontentcoach New rules as of 2024 in the UK for HMRC for #contentcreatorsuk #cla #sidehustle #hmrcnewrule #uktax #bookeeping #selfemployed #influencermarketing #influencersuk #creativebusiness #thecontentcoach ♬ original sound - The Content Coach
What's the Tax Threshold for TikTok Earnings?
Earning over £1,000 doesn’t automatically entail paying tax on it. There’s another significant threshold for tax payment, set at £12,570. If your annual income crosses this, you’ll pay a basic tax rate of 20%.
For instance, if you’ve earned £10,000 from a job and £5,000 from TikTok, you’re only taxed 20% on £2,430 of the total.
Which TikTok Income Streams are Taxable?
As TikTok grows, so do the ways to earn. All these count towards your passive income. The following TikTok Income streams do count as TikTok-generated Income that must be reported to the Tax authority of your country.
TikTok Creativity Program Beta
TikTok Income is earned from this program on payments made from TikTok to the content creator, based on monthly video views, requiring over 10,000 followers and 100,000 views in the last 30 days.
TikTok Tips:
When Content creators have 100,000 followers the TikTok Creator next program allows viewers to send virtual gifts which are redeemed by the creator as income.
Brand Affiliate Marketing Deals:
Income from promoting brands, not directly through TikTok. Content Creators that receieve any form of payment for endorsing any product or service in any form of reward, including money, gifts, services or products or the loan of a product is considered payment by the CMA.
TikTok Affiliate Program
E-commerce opportunities through TikTok. Content Creators that promote a product on TikTok shop and are receiving paid commission for the sale of any such products, need to declare this TikTok income-generated revenue.
Live Streaming
Content Creators that participate in live streaming are often referred to as TikTokers. Content Creators or TikTokers that live stream for any purposes such as: gaming, TikTok battles, Vlogging, Entertaining, tutorials, daily chat, shopping or other, and who receive virtual gifts whilst live streaming are liable to report these redeemable virtual gifts as TikTok generated Income if these gifts are redeemed as money.
TikTok Creator Marketplace
Within the TikTok app, Content Creators that qualify for the the TikTok Creator Next program, can qualify to access Creator Marketplace. TikToks Creator Marketplace is where content creators can work directly with brands to promote their goods and services within the TikTok app for paid endorsement. This is TikTok generated-Income that must be declared.
Can HMRC Track Unreported TikTok Income?
Yes, HMRC has several methods to discover undeclared income:
- Collaboration between TikTok and HMRC.
- The Making Tax Digital regime, enabling easier audits.
- External reports from individuals or businesses.
Is an Accountant Necessary for TikTok Creators?
While not legally mandatory, hiring an accountant is advisable. They ensure accurate reporting to HMRC and can identify deductible expenses. A TikTok-specific accountant simplifies the process, leaving you to track your earnings and expenditures.
This blog post was written by Ali The Content Coach, Coach to Creators, Coaches, Businesses and Brands. Find out how to work with her here.
