Do influencers have to complete Self Assessment tax returns?

If you are a vlogger, gamer, streamer or social media influencer who earns revenue from your work, it is possible that you will need to complete a Self Assessment tax return.

What is a Self Assessment return?

A Self Assessment return is required in order to establish your net income and capital gains tax due for the year. This may include revenue from your online content, sponsorships, endorsements, merchandise or other offline sources of income. It includes any reliefs or allowances claimed as well as any income tax deducted at source.

The deadline is 31 October if filling in a paper form or 31 January if submitting online. However, we strongly suggest you complete your tax return as soon as possible in order to avoid any last-minute issues or HMRC queries. You must also pay any tax you owe by midnight on 31 January.

Do I need to file a return?

You must complete a return if at any point in the last tax year (6 April to 5 April) you:

  • Were a partner in a business
  • Were self-employed as a sole trader and earned over £1,000
  • Had income from dividends in excess of £2,000 or investments and savings in excess of £500
  • Had income from abroad
  • Had income from renting a property
  • Had earned income from tips or commission

You can also opt to complete a tax return to claim certain income tax reliefs. Or if you’re self-employed, in order to apply for tax-free childcare or maternity pay.

Notice to file a return

It is mandatory to submit a Self Assessment return if you are issued with a notice from HMRC.

If you have not been issued a notice you must notify HMRC by 5 October following the end of the tax year if you have received income or gains which are liable to tax. For example, if you have capital gains in excess of £12,300 in 2021/22 then you need to tell HMRC by 5 October 2022 who will then send you a tax return to complete.

There are penalties if you fail to complete your return by the 31 January deadline or notify HMRC of any taxable income or gains (unless you have a reasonable excuse).

Are there any exceptions?

As a director you do not need to register for self-assessment and file a return if:

  • Your income is taxed at source, and you have no other sources of income
  • You have not received a notice from HMRC to file a return

If you require any tax advice or need help completing a return, please get in touch with one of our team.

Are company Christmas parties tax deductible?

The lockdown over Christmas last year due to the Coronavirus pandemic saw hordes of businesses moving the traditional office Christmas party online. So if you’re thinking of organising a company get together this year now restrictions have lifted, what savings are there to be made that will help keep your profits and your festive spirits high?

While there is no specific tax relief for Christmas parties, there is limited tax relief available for an annual event, providing certain conditions are followed.

How does it work?

HMRC states that the rules allow employers to spend up to £150 per head (including VAT) towards the costs of an annual function such as a seasonal party, without creating a tax liability. This includes the costs of booking a venue, catering, entertainment and decorations etc.

To qualify the party must be an annual event which is open to all staff generally (shareholders are excluded from this), or all staff at a specific location, if the employer has more than one location. If the employer has more than one annual event in a tax year, for all the events to be tax-free the combined cost per head must be no more than £150.

An additional £150 may be claimed for a plus one for each employee, providing they are either a partner or family member.

If any of your events cost less than this per head, you may be able to count them as exempt. However, you won’t be able to do this if you’ve already used up the £150 exemption on another event in the same year.

The full costs of any additional events that exceed this limit will need to be reported in full as a taxable benefit, even if they cost less than £150 per head on their own. Staff entertaining above or below the £150 threshold is normally a deductible expense for computing a company’s taxable profits chargeable to corporation tax.

Where benefits may become taxable, employers may wish to put a PAYE Settlement Agreement (“PSA”) in place to settle, on the employees behalf, the income tax and NIC due to HMRC on certain types of benefits and expenses payments.

Virtual Christmas parties

Although restrictions have lifted in the UK, not everyone is comfortable with the thought of social interaction at events yet. For those considering a virtual Christmas event this year, the good news is that the same rules as above apply. It’s best practice to organise your event well with clear detailed expenses matching any expenditure so you can show HMRC that it qualifies for the relief.

Christmas gifts for staff

If parties are off the scene altogether there are certain gifts for staff at Christmas that are also tax free if structured correctly. Employers are allowed to provide their directors and employees with certain “trivial” benefits in kind tax free. Under the trivial benefits rules, employers can provide benefits costing up to £50 (including VAT) to an employee without tax consequences – provided that these benefits are intended as genuine gifts and not intended as a reward for their work. There is also an annual limit of £300 for the total amount of trivial benefits a director can be gifted, this is in addition to the £50 individual limit per gift made.

This exemption applies to small gifts to staff at Christmas, on their birthday, or other occasions and includes gifts of food, wine, or store vouchers.

What are the conditions for the exemption to apply?

There are of course a number of conditions that need to be satisfied to qualify for the exemption:

  • The cost of providing the benefit does not exceed £50
  • The benefit is not cash or a cash voucher (i.e. a pre-loaded bank card).
  • The employee is not entitled to the benefit as part of any contractual obligation such as a salary sacrifice scheme
  • The benefit is not provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services)

The trivial benefit is not an allowance, therefore as soon as the cost of the gift exceeds £50, the entire amount will become a taxable benefit. In addition, this is not a solution for those employers who usually provide a gift under the trivial benefit rules already in addition to a party. Where two gifts are made for the same purpose, HMRC will combine the costs when applying the £50 trivial benefits limit.

Find out more

If you have any questions, please get in touch with one of our team on 01273 043678.

Tax treatment of Non-Fungible Tokens

Looking to sell your work as a Non-Fungible Token (NFT)? Or perhaps you are ready to start investing in NFTs? Either way, it is important to understand the quantum and timing of your tax exposure as well as what records you need to keep.

Basic tax treatment

NFT’s are a unique type of cryptoasset that is recorded on a blockchain. If you are interested in buying or selling NFT’s this may be because you are looking to create your own NFT, or you would like to start investing into NFT’s.

Like any cryptoasset, HMRC will usually consider an NFT as a capital asset held for investment purposes. This means that sales or disposals of an NFT will usually generate a capital gain or loss for tax purposes. Capital gains are subject to Capital Gains Tax (CGT). If you are creating your own NFTs, consideration would need to be given as to whether the NFT is subject to capital treatment, or is instead a trading activity which is taxed and accounted for differently.

Capital gains may occur when you:

  • Sell an NFT
  • Exchange an NFT for a different type of cryptoasset token including other NFT’s and cryptocurrencies
  • Give an NFT away to another person (excluding a spouse or civil partner)

The gain on the disposal of an NFT is typically the NFT’s value at disposal in £GBP less:

  • The cost of purchase
  • Transaction fees
  • Advertising for a purchaser or a vendor

The specific method of taxation and the amount chargeable depends on whether the investment is held by an individual, or within a structure such as a limited company – see below for the difference.

Individuals

Net gains of an NFT after the utilisation of any available capital losses in the tax year to 5 April should be reported on a self-assessment tax return. Any tax due becomes payable by 31 January following that tax year end.

Each individual in the UK is also entitled to an Annual Exemption (AE) from CGT. The 2021/22 tax year the amount is £12,300.

Companies

Disposals or sales of an NFT within a company structure will be reported on the company’s corporation tax return. Any resulting tax will fall due 9 months and 1 day after the end of the company’s accounting period.

The gain is chargeable to corporation tax, currently at a rate of 19%. The AE is not available to companies.

Traders / Creating your own NFT

In some cases HMRC may consider NFT activity to be a trade, this may be applicable if you are looking to create your own NFTs. Whether the buying and selling of NFTs amounts to a trade will depend on a range of factors including, but not limited to:

  • Frequency
  • Level of organisation
  • Intention

Speak with one of our team if you are creating your own NFTs, as our expertise can help you determine whether your activity is a trade or not for tax purposes.

Record keeping

HMRC state that it is the taxpayer’s responsibility to keep separate records for each NFT transaction.

Such records include:

  • Identification of the NFT
  • Dates of transactions
  • If they were bought or sold
  • The number of units involved
  • Values of the transactions £GBP (at the date of the transactions)

Find out more

Click here to read our fact sheet on cryptoassets

If you have a lot of NFT or cryptoasset transactions, it might be advisable to make use of a UK tax compliant cryptoasset-tracking software to record your gains.

If you need professional advice in connection with NFT’s or a cryptocurrency asset, please get in touch with one of our team.

Sole Trader vs Limited Company

The pros and cons for your business

When you start out in your own business, it’s not uncommon for you to find yourself as a one-person operation. You will oversee your own accounts, sales and marketing and everything regarding the products and services you provide.

But is going into business and setting up as a sole trader the same thing?

We take a look at the differences between being a sole trader or a limited company. We will examine the pros and cons each option has to offer. This will help you to weigh up the best option for yourself and your business.


Sole trader

Sole traders are individuals, formally recognised by HMRC who run a business for themselves. They are often referred to as self-employed or freelancers. However, the official term for such people is ‘sole trader’.

When you register with HMRC as a sole trader, you must keep appropriate financial records and pay any taxes due. This includes tracking all eligible expenses, issuing invoices for any work undertaken and submitting self-assessment returns confirming your taxable income.

When to set up as a sole trader

You will need to set up as a sole trader if any of the following apply:

  • If you have earned more than £1,000 from self-employment between 6 April 2020 and 5 April 2021
  • You need to prove you’re self-employed, for example to claim Tax-Free Childcare
  • You want to make voluntary Class 2 National Insurance payments to help you qualify for benefits

Usually, tax is deducted at source through the Pay As You Earn (PAYE) scheme. Sole traders however, use self-assessment to calculate their tax burden which is paid to HMRC twice a year. This is unlike being a traditional employee of another organisation,

Alongside these tax payments, sole traders usually need to pay Class 2 and Class 4 National Insurance Contributions (NICs). The amounts are calculated automatically when you submit your self-assessment form online. You can find out more about this on the government’s Self-employed NI rates page.

Pros of being a sole trader

  • It’s easier to set up as a sole trader: there’s less paperwork (although you still have to complete an annual tax return) and you don’t need to register with Companies House.
  • You have a greater level of privacy than limited companies: if you set up a limited company, some of your personal details will be published in the records of Companies House. However, you’ll need to put some information out into the public domain if you’re to market your business effectively.

Cons of a being a sole trader

  • You have full liability if your business gets into debt: it’s possible to protect yourself from such things through the likes of professional indemnity insurance and payment protection insurance, but keep in mind that liability for your sole-trader business ultimately lies with you.
  • You may be at a disadvantage when bidding for big contracts: even if you are providing exactly the service a client is looking for, internal policies may rule you out because you’re a sole trader and they’ve decided to work only with limited companies.
  • You may not be eligible to claim tax reliefs: you have to be within the charge of corporation tax to be eligible to claim Research & Development tax reliefs and the creative industries tax reliefs. Therefore you have to be a limited company in order to claim these reliefs.

Limited company

A limited company has its own legal identity and is structured as a business with shareholders and directors. The company can be run by just one person, however the setup is more involved than being a sole trader.

For limited companies run by an individual, the person in question becomes the director of the company and shareholder. They will take their remuneration by way of a salary, dividends (or a mix of both) from the business profits. How to remunerate yourself can be complex, but we can help to remove the complication.

To set up a limited company, you need to register with Companies House. You must file an annual confirmation statement and annual company accounts each year which will be on public record.

Pros of being a limited company

  • They may feel more trustworthy to some clients: a limited company can give the impression of a greater sense of permanence and financial success.
  • Limited liability: financial liabilities are placed on the company rather than on the individual(s) running the company. Generally, that means your personal assets aren’t at risk if you run a limited company.
  • They can be more profitable: limited companies pay corporation tax rather than personal income tax. You also have far more flexibility in terms of how you remunerate yourself, affording you more tax planning opportunities.
  • You have the potential to save more than sole traders: as a limited company, you can take advantage of a greater range of tax-deductible items. Those who plan for gradual growth sometimes start a business as a sole trader. They later switch to becoming a limited company.

Note that you may still need to apply for a registered trademark, if that’s relevant to your business.

Cons of being a limited company

More paperwork: It takes more effort to set up a limited company, and the ongoing reporting requirements are more onerous including filing the accounts with Companies House and the Corporation Tax return with HMRC. It’s advisable for limited companies to engage an accountant to keep their finances in order.

Whether you become a sole trader or limited company you should also consider whether you need to be VAT registered. VAT registration is compulsory if your business’ annual turnover exceeds the VAT threshold. This is currently set at £85,000 per year.


We’re happy to talk you through your options when setting up your business so you can make the best decision. Please get in touch with one of our team.

Facebook to pay $1 billion through 2022 in Creator incentives

Facebook Founder and CEO Mark Zuckerberg has announced a funding initiative to “reward creators for great content, making Facebook the best platform for millions of creators to make a living”. The move will involve paying out more than $1billion by the end of next year to creators who use Facebooks services in a variety of ways. 

Eligibility

The funding is available on an invitation only basis for the moment. Facebook is offering the first of the new bonus incentives to those creators making videos on the platform with in-stream ads enabled. Creators will also receive bonuses for hitting livestream milestones. Instagram will have its own bonus system which will also be on an invitation-only basis to begin with. Other rewards will be given to creators for enabling ads on IGTV or creating high ranking Reels, Instagram’s rival to TikTok’s short form video.

Facebook however is not the only content company to tempt creators with cash incentives. Following the success of YouTube’s $100 million funded YouTube Shorts video platform, Snapchat launched it’s own TikTok rival, Spotlight, in November. They now pay out $1 million per day to the creators posting the most successful videos to its platform.

When do payments start?

Facebook says that the cash bonuses will be paid out via Facebook and Instagram by the end of 2022. These will be “seasonal, evolving and expanding over time”. There will be a dedicated hub built within the Instagram app which houses the bonus programs available this summer to be replicated for Facebook later in the year. Facebook have also announced that it won’t be taking a share from any creators making a profit from its services until 2023.

Find out more

If you have any questions, please get in touch with one of our team.

YouTube’s Ad Revenue hits a record $7 billion

A record high of $7 billion in advertising revenue has been reported this week by YouTube’s parent company, Alphabet, exceeding expectations.

The details from an earnings call, which took place with analysts this week, revealed Google’s video platform saw ad revenue grow nearly 84%, up from $3.8 billion a year ago.

During the call, CEO of Google and Alphabet, Sundar Pichai said:

“In Q2, there was a rising tide of online activity in many parts of the world, and we’re proud that our services helped so many consumers and businesses,”

“Our long-term investments in AI and Google Cloud are helping us drive significant improvements in everyone’s digital experience.”

Over half a million YouTube channels had live-streamed in 2020 including “artists performing in their living rooms and churches moving their services online.” Pichai outlined the growing success of YouTube Shorts, the platform’s Tik-Tok equivalent short form feature for smartphones. He announced that it is now generating over 15 billion global daily views, up from 6.5 billion in March.

Sundar Pichai also highlighted that over $30 billion has been paid out to creators, artists and media companies in the last three years. He stated that the platform had paid more to creators and YouTube partners than in any other quarter in history of the company.

He went on to say:

“Videos in our new shorts player are receiving 3.5 billion daily views. We are looking forward to expanding shorts to more countries this year.”

If you need advice on your YouTube channel please get in touch with one of the Starbox team.

The momentum of Electric Vehicles

Is the EV finally coming of age? Should my company car be electric? Is the infrastructure good enough yet?

These are all questions that are becoming increasingly common in homes and businesses up and down the country. The tax reliefs and advantageous rates are a clear attraction for the fleet and business markets.

The market

Despite fully Electric Vehicles (EVs) only receiving a lot of media attention in the last few years, EVs have actually been around for a long time, generally achieving very moderate growth year-on-year. However, with the global focus on climate change, both from a legislative angle as well as changes in consumer behaviour, manufacturers are placing more time and investment in developing their electric ranges than ever before.

Roll this forward to 2021 and EVs appear to be one of the very few beneficiaries of the COVID-19 pandemic. Our current ‘new way of life’ lends itself very nicely to what an electric car has to offer – more of us working from home, fewer journeys, shorter journeys etc. This, coupled with the momentum gained in 2019, has led to an increase in market share from 2.2% in September 2019 to 6.7% in September 2020. This is all despite a c.30% reduction in overall car registrations YTD and a fall in oil prices.

So the momentum is clearly continuing and those manufacturers that began their electric journeys earlier are starting to reap the rewards.

The cost benefits for employers and employees

For employers, the EV option is fast becoming a very attractive proposition – both for large fleets and directors of small businesses. Aside from all the environmental benefits and the positive publicity this brings, there are a number of tax reliefs that make EVs a smart choice for businesses. Of course, there is also the much-reduced running costs, especially when charging at a home or office location.

For a start, the benefit in kind (BIK) on pure EVs for 2021/22 is 1% and this is only rising to 2% by 2022/23.. There is also no fuel benefit where the employer pays the charging costs of the EV. On top of this, the employer is entitled to 100% capital allowance on the EV in the year of purchase, giving a significant tax cash flow saving.

The products

New ranges of Electric Vehicles are being released all the time, with performance and battery figures improving all the time, as manufacturers compete to increase their share of this rapidly growing market. This fierce competition drives a significant rate of improvement and development – consequently, electric cars are already viable alternatives when comparing with internal combustion engines (ICEs). The technology and features within EVs are very exciting and forward-thinking, whilst some of the performance figures are mind-blowing.

Example: Porsche Taycan

A great example of this is the Porsche Taycan. Thanks to Porsche Centre Mid-Sussex, Partner and Head of Motor Retail at Carpenter Box, Chris Reeves was able to experience their electric offering first-hand and provides a glimpse of how far we have come and the practicalities of owning an EV:

Porsche Taycan 4S

“Clearly the Porsche Taycan is at the high end of the EV market, but, could realistically be affordable to a wider range of businesses and tempting to those who are currently suffering heavy BIKs for their performance company cars. For example, the BMW 530d is a popular company car (approx. £50k list price), but the additional cost of upgrading to an £80k or even £100k EV, is not significant and therefore becomes a real option.

First impressions of the Porsche Taycan 4S didn’t disappoint – as you might expect the exterior is stunning, but the interior is equally thought provoking. The cabin is incredibly refined yet simplistic, and when the power is switched on you are met with an array of touch-screens, with one for the passenger! Unsurprisingly, the driving experience and performance of the Taycan was sensational – despite the lack of gears and engine noise, it still felt like a Porsche.

It was a lot of fun to drive, whilst also feeling sensible as an ‘everyday’ car. The acceleration is an experience in itself and I was only in the 4S model – the Turbo S is over a second quicker to 60mph – quite simply not usually achievable outside of ‘supercar’ territory.

It’s important to remember that we aren’t really at the start of this journey – the electric market has been evolving for some time and driver confidence is now catching up. The market is suggesting that electric is the way forward with 184% increase in registrations in September 2020, and that now is the time to start making those decisions – there has certainly never been a better time to go electric.

If you are considering EVs in your business and you need some help crunching the numbers, please get in touch with one of our team.