Friday, 29 Mar 2024

OnlyFans stars and Instagram influencers targeted by HMRC in huge tax shake-up

Thousands of people across the world are making extra cash through web services such as OnlyFans, YouTube and Instagram, but in the UK the taxman has got his eye on all those side-hustles.

The UK is, perhaps surprisingly the influencer capital of the world. According to figures from Adobe, around 2.8 million of us are earning significant incomes from online work.

The average UK influencer pulls in around £120 an hour while content creators – people who make anything from OnlyFans clips to viral TikTok songs, will earn an average of £110 per hour.

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That’s serious money, and His Majesty’s Revenue and Customs want some of it.

HMRC is sending out over 2,300 “nudge” letters to influencers and content creators this month, plus a further 2,000 to people who are earning significant amounts through eBay, Etsy and Facebook Marketplace.

HMRC’s attitude to these digital workers is that they aren’t deliberately avoiding paying tax, simply that it may not have occurred to them that tax is payable on earnings obtained through social media and other portals.

An HMRC spokesperson said: "We believe our customers want to pay the right amount of tax, so we are taking steps to help people do so.”

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Anyone makes a profit from online activity – whether it’s encouraging Instagram users to buy lip balm or making explicit videos – is legally regarded as “trading” if their gross income is more than £1,000.

If that’s the case they’re obliged to fill in a self-assessment form every tax year.

The self-assessment forms can of course be completed online.

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The tax situation is made more complex by the fact that many content creators are receiving benefits in kind – gifts from their Amazon wishlists or other non-cash payments – making an exact tax liability hard to calculate.

HMRC has not revealed how much tax money is currently thought to be going unpaid.

However Adam Craggs, a tax specialist at law firm RPC, told the Financial Times that the letter-writing campaign suggests that HMRC must think there is a “sizeable chunk of income going untaxed from individuals making large sums of money”.

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HMRC points out that it receives complete financial information from online platforms such as OnlyFans – which itself will be paying tax – and fines can be levied for any late payment or deliberate tax avoidance.

Business coach and influencer Jessica Narweh says that in many cases, the online are simply young, naiïve, and unaware of the rules: “It’s not because they are avoiding tax on purpose — it’s because they literally don’t know they should be paying it,” she told the FT.

“The main focus is how can I get followers — I don’t think tax even crosses their mind until they see another influencer talking about it.”

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Source: Read Full Article

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