Under The Influence
Anyone who is a user of social media platforms such as Instagram has probably been ‘influenced’ at some point. This might be as simple as seeing somebody locally trying out the latest coffee shop in town – and being tempted to give it a go as well – to seeing a well-known influencer recommending that ‘perfect’ lipstick or beer.
Previously, we might have seen a familiar face, such as Gary Linnkear, on television advertising crisps, but now we might end up buying something recommended by a stylish Mum whose only ‘claim to face’ is building an impressive following on TikTok.
According to figures from Statista, approximately 2.4% of social media users are considered influencers, resulting in 127 million influencers worldwide (based on 5.17 billion social media users globally). What stands out most is this statistic – that 30% of influencers are now able to generate a full-time income from their social media activities.
In a recent blog, we asked the question when does somebody selling, say, candles, at a few local markets and online, become a ‘business’ and when should you declare your earnings to HMRC? The same question could be posed by social media influencers. They could start off accepting a free coffee locally, in turn for sharing photos online but – as followers increase – this could quickly escalate into being offered a weekend away at a local spa. In addition, some brands not only give away free samples but actually pay the most prolific influencers for their stories.
Unsurprisingly, this has not gone unnoticed by HMRC and at least one of our clients has recently received a letter from the organisation because their records show she ‘may be a social media content creator’. In fact, she supports local businesses with their social media, rather than being an influencer herself. However, the letter invited her to take part in some independent research being undertaken by NatCen (National Centre for Social Research).
NatCen states on its website:
Content creation on social media is a fast-growing area of the economy. As an increasing number of people look to social media as a way of making money or receiving other benefits (such as gifts), HM Revenue & Customs (HMRC) wants to better understand this evolving industry.
This research will help HMRC to better understand this evolving industry by exploring how social media content creators describe themselves and what they do, and how HMRC can best provide information to the sector.
We suspect HMRC wants to understand better how this burgeoning sector works, particularly in the way that influencers are not only paid for their services (which is fairly easy to report on) to the, sometimes very substantial, gifts they receive.
In the meantime, if you have a business based around social media in any way at all and need some advice on filling in your Self Assessment tax return, please do get in touch: tel: 01892 513515 or email: info@lewisandco.biz