Tax & Accounting advice for UK Streamers & Content Creators - Boffix

Tax & Accounting advice for UK Streamers & Content Creators

November 22, 2021  /  Lizzie Sullivan
Desk with business tools, including a laptop & phone

The streaming industry is continuously growing. 

More people are using platforms such as Twitch and YouTube to start a career in content creation. It’s easy to see why, many have found great success from streaming and producing entertaining and informative content.

How can the idea of doing what you love, from the comfort of your own home, whilst earning money, not sound appealing?

It also sounds super easy, right?

But what about the tax and legal requirements? 

Creators can generate their income in a variety of ways, from views, subscriptions, advertisements, donations, merch sales, brand partnerships and more!

This Income can also come from multiple channels or platforms, so when it comes to the accounting and tax side of things, it can get very confusing..

We’re going to answer the most common questions we get and cover everything you need to know, ensuring you avoid any future charges or penalties..

 

When do I have to pay tax on my earnings?

You don’t have to pay tax if your income is less than £12,570 in a single tax year. 

Bear in mind, your total income will include anything from wages from other jobs or freelance work, donations, savings and more – not just a single source of income.

Once your total income amounts to more than your tax-free personal allowance (currently £12,570, you can check for the latest figure here) then you will have to pay tax.

You can deduct allowable expenses from this amount, which can in hand minimise the amount of tax you have to pay.

The tax year runs from April 6th to April 5th. So, the tax due from the income generated between these dates will have to be paid by January 31st the following year.

What if I have another job and earn money streaming or creating content on the side?

The first £1,000 of income from self-employment counts as your ‘trading allowance’ and you won’t need to pay tax on that.

But remember your total income figure is made up of all your income streams. If you have any other jobs or income streams, then you will need to add up all of these to find out if you need to pay tax.

For example, you can’t earn £12,570 from one job and then £12,570 from another to avoid paying tax. This total of £25,140 means you are required to pay tax.

How much tax will I have to pay?

This is dependent on your total income figure.

Once you have worked that out then you will fall into one of the following tax bands:

Basic rate

£12,571 to £50,270

20%

Higher rate

£50,271 to £150,000

40%

Additional rate

over £150,000

45%

The first £12,570 you make is not taxable, you will only get taxed on the amounts over that.

For example, if your total income comes to £20,000, you will get taxed 20% of £7,430, which is £1,486.

What if I’m a minor?

If you are under the age of 18, you are still required to pay tax on your earnings.

You can get someone else to submit your tax return on your behalf if you are unsure of how to do this yourself. Reach out to a parent, guardian, agent or accountant for the support.

Do I have to pay tax on donations?

Yes, these need to be included in your total income figure and are taxable!

This also goes for tournament winnings, if you are and esports player for example and win a lump sum then you will have to pay tax on that unless your organisation has done so already.

What if I receive physical gifts?

Gifts you receive (e.g. Gaming equipment or merchandise from a fan or sponsor) may or may not be taxable, depending on the nature of the gift. 

We would recommend getting in touch with us or your Accountant to confirm each gift you receive and whether you need to include it in your tax return.

What if I receive income in other foreign currency?

Most platforms will automatically convert foreign currency for you by the time it enters your bank account. If this is not the case then you should follow the exchange rates shown on the HMRC website to convert these yourself.

What if I run a Charity Stream?

When raising money for charity you do not need to pay tax on any revenues received.

Once all the donations have been received then all you need to do is pass them over to your chosen organisation.

You can not keep any of the funds raised for the charity, this is against the law as you would be committing fraud.

If the charity is your own and is registered and recognised by the Charity Commission, then you can claim tax relief on those donations received.

What are allowable expenses?

Allowable expenses are essential costs that keep your business running properly.

Some examples include:

  • Equipment used for creating content such as your PC, monitors, cameras, microphones, lighting.
  • Office furniture like your desk and pc chair.
  • Software used to edit content.
  • Props & video games specifically for the purpose of making a video.
  • Advertising and marketing costs.
  • Travel expenses, if you need to go to business meetings or events.
  • Portions of your internet, electricity and heating costs.

Get in touch with us or your Accountant to double check if you are unsure of anything!

How do I pay my tax?

You will have to let HMRC know by registering for self assessment, once you have done this then you will be required to complete a self assessment tax return annually.

We are able to register and complete your self assessment tax return on your behalf, saving you time and ensuring you stay stress free!

Check out our formation and service packages here.

What if I don’t pay my tax on time?

As previously mentioned the deadline for paying your tax is January 31st.

You could receive fines and penalties for not paying on time. Interest will also be generated over time so the amount you will have to pay will increase, so it’s best to be prepared and pay as soon as possible to avoid this.

If you are worried that you have already missed the deadline then get in touch with us ASAP and we will do what we can to help!

Do I need an Accountant?

You don’t have to have an Accountant if you are confident and capable of doing everything yourself.

However, Accountants can be great for saving you the time and stress. They can managing your accounts, bookkeeping and tax returns on your behalf, ensuring everything is completed on time and correctly so you can avoid fines and penalties. 

Here at Boffix we also give great business advice and help you save on tax too, so feel free to get in touch for a FREE chat!

Digital Bookkeeping and Accounting Software

Whether you choose to get an Accountant onboard or do your bookkeeping yourself, you may want to consider using digital bookkeeping and accounting software to simplify and speed up the process.

This saves you having to save physical receipts, manage paper accounts and comes with additional benefits that may come in handy for you or your business.

We personally recommend using QuickBooks but there are many options to choose from that we supply.

Get your discounted QuickBooks license here!

Should I consider forming a limited company or being a sole trader?

Forming a limited company can sometimes be much more tax efficient but also requires more work.

If you are a higher earner then it could be beneficial but we would consider getting some extra advice and hiring an accountant.

Check out our video explaining the differences between a sole trader or limited company to help you make a decision.

If you haven’t already registered as a sole trader, or want to form a limited company then check out our formation services so that we can get you all set up!

Hopefully this answers all your questions and queries regarding tax and accounts for streamers and content creators.

If you do have any further queries then please do not hesitate to get in touch.

You can contact us either via email: hello@boffix.com or book in a quick chat with one of our friendly experts.

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