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TikTok Tax Guide

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Everything a content creator needs to know about tax when earning money through TikTok

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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:

  • Nano influencer: <50,000 followers
  • Micro influencer: 50,000-150,000 followers
  • Influencer: 150,000 - 500,000 followers
  • Marco influencer: 500,000 - 1 million followers
  • Mega influencer: >1 million followers

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 become a TikTok Creator

The process to register an account on the platform is very easy and free. First of all, you need to download the TikTok app on your phone, then open it and register with whatever method you prefer. After this, TikTok will ask you to provide them with your birthday, phone number and email (if you haven't signed up with that already). Lastly, you'll be asked to select what you're interested about from a list of topic, so that the algorithm can provide you only with content that you care about.

At this point, all you have to do is to start creating your content and attract the biggest number of followers that you can!

How to make money as a TikTok Influencer

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. 

However, 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

  • In the UK the TikTok creator fund is part of Creator Next which helps creators up their content game, giving them access to a network of brands, tips and gifts. 
  • You need to be 18+, have 10k+ followers, have 100k+ views in the last 30 days, and have 3+ videos in the last 30 days. 
  • According to Hootsuite it’s estimated you can earn 2 to 4 cents for every 1,000 views. Which isn’t much but the idea is that you start to hit millions of views on a regular basis through the Creator Next support. 

Being paid by brands to promote them and their products

  • This can really vary depending on your niche and following. Some industries will pay more depending on their product and the scope of their campaign. But as a general guideline, Influencer Marketing Hub estimate:
  • Nano-influencers: $5–$25 (£4.32-£21.60) per post
  • Micro-influencers: $25–$125 (£21.60-£107.90) per post
  • Mid-tier influencers: $125–$1,250 (£107.90-£1,079) per post
  • Macro-influencers: $1,250–$2,500 (£1,079-£2,157.90) per post
  • Mega-influencers: $2,500+ (£2,157.90+) per post

Receiving gifts and tips from followers

  • Live Gifts is a new feature that came in at the end of last year. Influencers can now receive tips directly from followers through TikTok. These tips come in the form of TikTok Coins and TikTok Diamonds and can be transferred into cash by the recipient. 
  • Users are able to tip up to $100 (£86) per transaction and up to $500 (£431) dollars per day. 
  • It’s a bit too early to see what kind of incomes influencers are generating from this. But it could be a very fruitful form of regular income if you promote the feature to your fans. 

Affiliate Marketing

  • Affiliate marketing isn’t dissimilar to being paid directly by brands to promote their product. The difference is that you’re given a discount link to promote and you’ll receive a certain percentage of the purchase made through the link. So it’s down to you to get it out there as much as possible. The more people who buy, the more money you’ll make.

TikTok Pixel (Shopify)

  • If you already have a website and you want to promote your products, TikTok Pixel allows you to convert TikTok users into costumers.
  • It allows you to manage your TikTok ads directly from Shopify, tracking the impact your ads have on the platform and the activity on your website of an impacted user. Specifically, you can monitor sales, user activity and acquire quality information to find your audiences.

Do I need to pay tax? And how do I pay tax?

TikTok Tax O’clock. This all depends on how much money you make with TikTok (and outside it).

If you earned less than £1,000 a year with TikTok you do not need to do anything. HMRC lets you earn £1,000 a year through platform like TikTok without worrying about income tax.

If you earned more than £1,000 a year with TikTok, you need to submit a tax return. This doesn't necessarily mean you need to pay tax. It just means HMRC wants to know a little bit more about your situation in case you start earning more in the future.

As with any self-made income you’ll need to pay tax on your revenue if you make over £12,570 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.

As you start out you're more likely to be a sole trader in which case the bands for tax are:

  • Tax allowance: 0% of earnings (You’ve earned between £0 and £12,570)
  • Basic rate: 20% of earnings (You’ve earned between £12,571 and £50,270)
  • Higher rate: 40% of earnings (You’ve earned between £50,271 and £150,000)
  • Additional rate: 45% of earnings over £150,000

Don't forget that you'll also need to pay National Insurance on your income if you earn over £11,908 in a year.

If you start hitting that higher rate of tax then it's worth setting up as a limited company. This means you'll pay corporate tax on your earnings at 19% rather than 40%+ income tax. If you're on the basic rate it's worth remaining as a sole trader and avoiding the additional admin and costs of setting up a limited business.

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 here.

For a content creator you might expense things like:

  • A laptop
  • Editing software
  • A camera
  • A phone
  • Lighting
  • Materials that feature in your content
  • Transport if travel is involved
  • Props and set design

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. 

Check it out here.

Other TikTok articles

Looking for more? Why not check out some of the other articles we've written to help you with your TikTok business?

Watch this space..
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