Do YouTubers pay tax?

How are YouTubers taxed?

YouTube offers a new, innovative way for content creators to share their content. And provided you have a substantial amount of subscribers, it can also be a form of income.

Just like most other income, earnings from advertising revenue, streaming donations, channel memberships and merchandise is taxable.

Even if YouTube is just a hobby of yours, any money you earn from your channel must be declared through a Self Assessment tax return.

That’s why it’s very important that you know exactly what you’ve earned, as well as how you’ve earned it. Keep copies of invoices, bank statements and business receipts so HMRC can work out exactly how much tax you owe through your Self Assessment tax return.

Personal Allowance for YouTubers

The amount of Income Tax Youtubers have to pay depends on how much of your income is above the Personal Allowance of £12,570. This is the tax-free income everyone in the UK is entitled to receive each year.

There are a few things that can decrease your Personal Allowance. For example, if you earn over £100,000:

Your Personal Allowance goes down by £1 for every £2 that your adjusted net income is above £100,000

This means that you lose this allowance entirely if your income is £125,140 or above

However, you can reduce your adjusted net income by paying into private pensions and charity donations.

But, Youtube is just my side gig!

If you just use Youtube to make a bit of extra money alongside your main job, do you need to pay tax on it?

The Youtube Partner programme means any content creator with over 1,000 subscribers can monetize their content – so if you do make money from YouTube, you will be liable for tax.

It’s important to know that YouTube does not withhold taxes, so tax is not pre-deducted from income earned from your channel. Therefore, unlike the money you receive from PAYE employment, you’re solely responsible for paying tax on any earnings you make.

There’s a lot of confusion around the Personal Allowance for when you have more than one source of income. People often think that the £12,570 figure applies to every different job they might have, but that’s not true!

Here’s an example of how it works:

• Let’s say you’re employed part-time as a retail assistant and you earn £9,000 a year from this job
• In your spare time, you run a Youtube make-up tutorial channel. It’s very popular and in 2021/22 you make £10,000 from advertising revenue
• In the eyes of HMRC you will have earnt £19,000 overall, which is over the Personal Allowance threshold and therefore, taxable

You can work out your own tax with the TaxScouts calculator.

How do Youtubers pay taxes?

As a Youtuber, you’ll pay taxes on any money you’ve made through a Self Assessment tax return. And you have to do a tax return if you earn more than £1,000 per tax year.

Remember that the margin for error is quite slim with HMRC, so getting help when filing your tax return can be worthwhile. You can choose to either:

• Do your tax return yourself via HMRC
• Pay an accountant to help you with it
• Use a smarter, cheaper online service like TaxScouts – (we also provide tax information and advice).

If you’ve never done a tax return before, you’ll need to register for Self Assessment first. You should do this by 5th October in any given year.

When it comes to actually paying your tax return, you should do this by 31st January the year after the tax year you’re paying for. So your 2020/2021 tax return should’ve been paid by 31st January 2022.

Trading Allowance

If you’re a Youtuber alongside your full-time job, you can make the most of the Trading Allowance which allows you to earn up to £1,000 additional income tax-free. Beyond this, you must do a tax return at the usual rates of Income Tax and National Insurance.

Can I claim any money back?

Yes! One of the benefits of filing a tax return is that you can claim tax back on some of the things you may have purchased for your Youtube channel. But you can only do this if you don’t claim the Trading Allowance.

As long as you can prove that the expenses that you’re claiming are ‘wholly and exclusively’ for your YouTube business, then they are tax deductible. So remember to hold onto your receipts!

Want to know more about TaxScouts? Find out more about who we are and what we offer more here.