Do I have to pay tax on TikTok in the UK?

At Capture Accounting, we specialise in empowering content creators and influencers in the UK with the knowledge they need to manage their finances adeptly. 

Although being a TikTok creator can be financially rewarding, it requires sound financial management to ensure long-term sustainability and growth. 

What are the UK Tax Laws for TikTok earnings?

With great earnings come some tax responsibilities. Just like any other job or business, the money you make from TikTok isn't just 'free money'. In the UK, the taxman has a keen eye on the growing digital economy, including social media earnings. 

So, whether you're making a little side income or hitting the big league as a top content creator, it's essential to get clued up on the tax rules:

• Self-employment Tax: If you earn money from TikTok, you are considered self-employed. You must register as self-employed with HMRC and pay income tax and National Insurance contributions.
  
  
• VAT - Value Added Tax: If your earnings exceed the VAT threshold (£90,000 currently), you'll need to register for VAT, charge it on your sales, and report and pay it to HMRC.
  
  
• Income Tax and National Insurance Contributions: Your TikTok earnings are subject to income tax. The rate of tax you pay depends on your total income. Additionally, you'll need to make National Insurance contributions, which help to build your entitlement to certain state benefits.
  
  
• Tax Deductions and Allowances: Deductible expenses related to your TikTok activities can reduce your taxable income. Understanding what expenses are deductible is crucial.
  
  
• Tax Deadlines and Payment: Be aware of tax deadlines, including when to file your tax return and make payments to ensure you remain compliant and avoid penalties.

What financial records should a TikTok creator keep?

Keep a record of all your TikTok earnings, invoices, expenses, and any contracts with brands or other parties. Maintain receipts for all business-related purchases and expenses.

What expenses and tax deductions can a TikTok creator make?

Understanding and properly handling business expenses and deductions is crucial for reducing your taxable income and maximising your earnings from TikTok. 

And since no one likes to pay more tax than they should, we thought this would come in handy for you.

Common Deductible Expenses for Content Creators

• Equipment purchases such as cameras, lighting, and microphones.
  
  
• Subscription services are required for content creation or editing.
  
  
• Advertising and marketing costs to promote your TikTok channel.
  
  
• Travel expenses for content creation purposes.
  
  
• Home office expenses if you have a designated area for content creation.

VAT and Expense Deductions

If you are VAT registered, understand how to reclaim VAT on your business purchases.

Maintain accurate records of your VAT expenses and ensure you adhere to HMRC guidelines on VAT reclaims.

How do you allocate expenses between personal and business use?

Determine the business use percentage of shared expenses, like internet and phone bills, and only deduct the business use portion. Keep a log to document the business use of shared expenses to substantiate your deductions.

Conclusion

TikTok is a great platform for making good money from your content. However, understanding the financial and legal landscape of TikTok monetisation in the UK requires a blend of awareness, preparation, and professional guidance. 

This guide, brought to you by Capture Accounting, aims to equip you with essential knowledge on monetising your TikTok presence responsibly. We've explored TikTok's monetisation avenues, brand collaborations, UK tax laws, financial management practices, record-keeping, and expense handling.

For personalised advice and a deeper understanding, we encourage you to reach out to our accounting professionals. Together, let's ensure that your TikTok journey is not only creatively rewarding but financially sound and compliant with all requisite regulations.