What expenses can social media influencers claim?

As a social media influencer, you earn your money from activities such as sponsorships, brand deals, from YouTube, selling beauty products etc.

You are required to pay HMRC tax on the profit from these activities, if you earn more than £12,570 per year (the rate for 2022/23 tax year).

You will naturally incur some expenses that directly relate to those sources of income, most of which can be claimed back as a reduction on tax.

Things like your camera equipment, your laptop, your phone, travel expenses to shoots, paying talent agencies, legal expenses on contracts and software subscriptions for editing videos all count, plus many more.

As a rule, allowable expenses must be wholly and exclusively incurred in running your self employed operation.

For example, you can only claim mileage costs on journeys made for business purposes, not for personal errands.

The total amount of expenses can be reduced from your taxable profit at the end of the tax year, i.e. you can reduce how much tax you pay and keep more of your earnings. Result!

How are online influencer expenses calculated?

As part of your self assessment tax return, you will be required to declare your total income (turnover). You then calculate your total allowable expenses, and deduct that from your revenue which makes up your 'profit'.

So you only pay tax on the money you earn after expenses, thus reducing your bill.

Example:

• Turnover: £24,000
• Less expenses: £5,000
• Taxable income (profit) = £19,000
• Tax bill @ 20% = £3,800

In this example, if no expenses were claimed, the taxable income would be £25,000 and the tax bill would be £4,800. You can see, therefore, that the more expenses you claim, the lower your declared profit and the lower your tax bill.

The headline? For every £100 of allowable expenses that you don't claim, you lose £20. So make sure you pay tax on your profit, not turnover!

When can you deduct influencer expenses from your tax bill?

After the end of each tax year, self employed individuals are required to complete a self assessment tax return to HMRC, to declare income they earned for the year.

They are then required to pay tax on all earnings above their personal allowance (which is currently £12,570)

Within the tax return, there is a section in which you can list all of the expenses that you have incurred and this amount will be offset against your income to reduce your declared profit so that you pay less tax.

Do I need proof of my expenses?

Although you are not required to submit evidence of your expenses (i.e. receipts) with your tax return, you must ensure you have an accurate record, should HMRC query the amount.

That is why it is good to have the services of a qualified accountant, to ensure your records are bang up to date.

What counts as an expense for influencers?

There are a huge variety of expenses which you can use to pay less tax on your profits. Some of the more commonly seen expenses include office costs (stationery, etc.), travel expenses, subscriptions to online services such as social media platforms, advertisement costs such as sponsored posts, mobile phone costs, filming equipment, accounting costs and insurance.

Allowable expenses for influencers

• Paying freelancers (videographers etc.)
• Subscriptions to apps you need for your operations
• Equipment you buy for use in your operations, eg. your camera, laptop, phone
• Your mobile phone subscription
• Accountants fees
• Travel costs incurred for business purposes
• Cost of photoshoots
• Agents fees

4 expenses that you didn't know you could claim as an influencer

There are some lesser known expenses you can claim which are not always proactively advised by accountants which include:

• 45p a mile for use of your car for business purposes (you can charge this to your company and receive it tax-free)
• "Rent" for using part of your home as an office
• Mobile phone costs
• Paying other influencers to promote your stuff

The tax treatment for social media creators is relatively new so there is no exhaustive list of what can and can't be claimed and therefore we go back to first principles to decide whether something is wholly and exclusively incurred for the benefit of your company.

What expenses can influencers claim for working from home?

If you do most of your work from the comfort of your own home, there are some costs which you may be able to claim.

For example, some influencers may have a dedicated online content creation room with green screens, camera setups etc., which they only use for their work and never for personal use.

In this scenario, you may be able to claim a portion of your home costs as expenses depending on how big the room is in comparison to the rest of your home.

What expenses are not allowed for tax deductions?

There are certain expenses that you need to be aware of which might not be allowable.

For example, client entertainment costs are not allowable, so think twice before buying the expensive champagne at the restaurant as there are no tax deductions to be had in this scenario.

Free gifts to clients are treated much the same way as entertainment, although, there are certain situations where gifts are allowable (when they have your logo on, for example).

Also expenses which you would incur whether you had a business or not are not allowed - for example, paying for your food, your protein shakes (!), your gym membership (unless you can prove you used it exclusively for business purposes e,g for a photo shoot) would not be considered an allowable expense.

Clothes are not allowable either, unless you can demonstrate that you only bought them for use in your social media posts and would not have bought them otherwise - or if they have some sort of marketing purpose e.g clothes with your logo on.

What happens if I claim an expense incorrectly?

There is always a grey area when it comes to which expenses are allowable and which aren't, which is why it's always best to speak to a specialist who can advise you on what qualifies and to help maximise what you claim.

If you try and claim something in your tax returns and get it wrong, HMRC can fine you and send you a demand including interest for tax underpaid - not a position you want to find yourself in.

In summary

There is no such thing as "influencer tax" and self employed social media influencers are treated the same as every other business, and as such, can claim a lot of the normal expenses incurred through generating income.

Online influencers lead busy lives and may struggle to find the time to keep track of all their expenses, which is why we highly recommend using an influencer specialist accountant like Capture.

We can help you keep on top of things and ensure your tax bill is the lowest it can possibly be without falling into any traps that may get you in trouble with HMRC!

Get in touch

Whilst it may seem straight forward to complete your tax returns on your own, if you want to make sure you are claiming everything you possibly can then it pays to consult an accountant such as Capture.

To find out whether you are maximising your expenses and keeping as much of your profit as you're entitled to, book a call with us and we'd be happy to guide you - whether you are making the claim yourself, or if you'd like us to do it on your behalf.

Download our free guide

We've come up with this free guide to help influencers stay on top of their finances and avoid potential tax pitfalls. Download it here.