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May 17, 2022
May 17, 2022
Side hustle

A TikTok Creator’s Guide to Tax

A Guide to what a TikTok creator is, what kind of money you can earn from it and how much tax you’d have to pay. 

TikTok is the world’s biggest short-form video platform. And if you haven’t checked it out, take one glance and you can find you’ve spent 30 minutes watching videos of cooking tutorials or dance routines just like that. 

TikTok’s also produced a huge number of paid gigs for creators who consistently put out content that has people coming back for more. Since the pandemic began in 2020 stat site Statista reports there to be around 3.1 million creators (or influencers - the two are generally interchangeable) on the app. Each of them making some level of income whether it’s through direct payments from TikTok or paid campaigns with brands.

Seeing this, you might wonder what exactly a TikTok influencer/creator is, how much you could make in the business and if you do make some money, how much tax you’d have to pay. 

What is a TikTok Influencer?

According to TikTok marketing platform Fanbytes, a TikTok influencer is someone with over 1,000 followers, who’s videos regularly get high engagement and has built an endeared set of fans through regular posts. That said, in order to be recognised by TikTok themselves and receive payments directly from their creator fund you need at least 10,000 followers, 100,000 video views in the last 30 days and a Pro account. So there’s some work to do.

To give you an idea of scale:

Usually the more followers you have the more money you can make, as brands look to influencers with the biggest reach for promoting their products. 

It’s believed that TikTok’s algorithm makes it easier to achieve influencer status than on competitor platforms YouTube and Instagram. This is because its algorithm better matches the content you make with the audience who’ll enjoy it.

So if you’re into making short form videos and have a particular interest that could be your USP (it could be anything from baking to pilates) then you could try your hand at regular posts showing what you do. Just remember it’s a crowded space out there with so many would-be influencers doing similar things. Make sure your uniqueness shines through!

How to make money as a TikTok Influencer

It doesn’t just have to be as an influencer that you make money through TikTok. If you’re a music producer and you have a song go viral on the platform then there’s a high chance of it charting in a few countries. Another popular use for TikTok is to sell merchandise. Or you can promote any other form of work, whether you’re a mechanic tuning cars or a children’s entertainer, you can find the right audience using the app. 

But as an influencer there are a couple of methods for earning money. 

The TikTok creator fund: 

Being paid by brands to promote them and their products:
Receiving gifts and tips from followers.

Affiliate Marketing

Do I need to pay tax as a TikTok Influencer?

TikTok Tax O’clock. As with any self-made income you’ll need to pay tax on your revenue if you make over £1,000 in the tax year. 

If you’re doing the TikTok stuff on the side then you’ll need to understand paying tax as a side hustle. You can read more about side hustles in our blog post here.

If you’re going full-time influencer mode then you’ll need to understand paying tax as self-employed. You can read more about going fully freelance in our blog post here.

You’ll also need to decide if you’re going to be a limited business or a sole trader. Each of these has different effects on how you’re taxed.

Most likely you’ll be a sole trader if you’re just making content by yourself. 

If you’re selling products with a brand name and employees then you might choose to register as a limited business

You can read more about these in our freelancer blog post here.

If you’re a sole trader then the bands for tax are:

If you’re a limited business you pay 19% in corporation tax on all revenue. 

How do TikTok Influencers pay tax?

Each year you need to fill out a self-assessment tax return. What you pay is your freelance tax bill minus the expenses of running your business. You can read more on how to complete your self-assessment tax return in this Earnr article

The usual cut off date to complete your self-assessment is the 31st of January if you’re doing it online, and 31st of October if you’re completing the form by post. 

What can I expense as a TikTok influencer?

As a creator you’ll have various running costs depending on the work you do. You can deduct these costs from your taxable profit as long as they’re eligible expenses. 

So if you earn £50,000 and you claim £9,000 in expenses, you’d only be taxed on £41,000 for the year. 

Note that if you use the £1,000 tax free trading allowance you won’t be able to claim expenses. 

You can read more on what the Government considers expenses in our blog post here. [LINK]

For a content creator you might expense things like:

How can Earnr Help?

Earnr makes self-employed bookkeeping easy, so that you can spend less time worrying about this kind of stuff and more time growing your business. 

You can separate your business transactions from your personal ones, track your expenses and get a real-time tax estimate so you know whether or not you need to submit a tax return. 

You can check it out here.

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