March 2025 – all figures and rates are correct as of this date
If you’re trying to break into the world of influencing, you don’t need us to tell you that it takes hard work. It isn’t all selfies and free stuff – it’s a full-time job. Just like any job, if you’re earning money from it, you will eventually have to pay tax. And, as your own boss, that means registering as a business.
If you are a social media influencer and you generate income from your channels, you must register with HMRC as a sole trader once your earnings reach £1,000 a year. If you expect your income to grow quickly, it may be worth registering as a limited company instead, which comes with benefits but also more responsibilities.
That’s it in essence, but read on for more information about why, when and how to register your influencer business and how much tax you will need to pay.
What do accountants know about influencers? When their CEO has 85k+ followers on LinkedIn, it turns out quite a bit… Smooth Accounting specialises in accounting for influencers and understands your business. If you need help cutting through tax jargon and making sense of your numbers, drop us a message.
Signs you need to register your business as an influencer
Not sure if it’s time to register your influencer activities as a business? If any of these are true for you, then your hobby/side hustle is turning into a full-blown business:
- You’re being paid for content – Whether it’s cash, free products, or affiliate earnings, if brands are paying you to promote them on your social media channels, that counts as income.
- You’re working with brands regularly – Occasional gifted items might not raise any flags, but consistent partnerships? That’s business activity.
- Your earnings hit £1,000+ in a tax year – This is HMRC’s threshold, known as the ‘trading allowance’. Once you go past it, you must register as a business.
- You’re spending money to grow – Investing in equipment, boosting posts, or hiring help? These are business expenses, and another sign you’re running a business.
- You’re treating it like a job – If you’re posting to a content plan, negotiating fees, or pitching to brands, it’s no longer just a hobby.
Sound familiar? Then congratulations – self-employment beckons! Don’t worry, though; it’s not as daunting as it sounds (especially with a specialist influencer accountant by your side).
What are the business structure options for influencers?
If you’ve decided it’s time to register as a social media influencer business, there are two common routes: you can choose to register as either a sole trader or as a limited company. Each business structure has its pros and cons, depending on your goals, income level, and how you want to manage your finances.
Sole trader
This is the simplest way to get started. All you need to do is complete a quick online registration and, boom, you’re a self-employed sole trader. Then, you’ll be personally responsible for your business’s finances, which means keeping records and filing tax returns.
How to register as a sole trader
Registering as a sole trader is free, quick and easy and can be done online via the HMRC website. You’ll need to create a Government Gateway account and provide some basic details like your name, National Insurance number and the nature of your business. Once registered, you’ll receive a Unique Taxpayer Reference (UTR) number, which you’ll need when filing your self-assessment tax return.
What tax will I pay?
While you have to register as a sole trader when your income reaches £1,000 a year, you won’t have to start paying tax until your taxable income exceeds your personal allowance (currently £12,570).
Unlike being employed, you are responsible for declaring your income, calculating your tax bill and making payments. To do so, you must complete an annual self-assessment tax return before 31 January. It’s good practice to get it done early, but no tax will be due until 31 January.
It is important to note that once registered, you will still need to file a tax return each year, even if your profits are below your personal allowance and you have nothing to pay.
As a sole trader, you’ll pay:
Income tax
You must pay income tax on your profits above your personal allowance (£12,570 for 2025/26). How much you pay depends on how much you earn. Take a look at the latest income tax brackets and rates here. Basically, you will pay a percentage based on what tax bracket your earnings fall into, at either 20%, 40% or 45%.
It’s important to take advantage of any available tax relief to avoid paying more than you need to. For example, influencers incur expenses like equipment and travel – you can claim allowable expenses to lower your taxable income and, therefore, your tax bill.
National Insurance Contributions (NICs)
You will have to pay Class 4 NICs, depending on how much you earn – you can see the current NIC thresholds and rates here.
If your profits are below the threshold, you won’t have to pay them, but it might still be a good idea to make voluntary contributions. Why? Because keeping your NICs up-to-date helps build up your State Pension and can affect whether you qualify for things like Maternity Allowance or other benefits in the future. It might not seem like a big deal now, but a few small contributions could make a real difference later on.
Sole trader pros and cons
Pros
- It’s easy and quick, and there is no cost to set up.
- Less admin is required than a limited company setup.
- You keep all your self-employed profits (after income tax and National Insurance Contributions are deducted). You can take it all as a salary or invest it back into the business – it’s up to you.
Cons
- You and your business are considered the same legal entity – that means you face personal risk if your business runs into debt or faces legal challenges.
- Being a sole trader doesn’t necessarily have the same kudos as being a limited company director, which might matter to potential brand partners.
- Once you head into the higher rate tax bracket, you might end up paying more tax than if you were operating as a limited company.
Conclusion – is sole tradership right for me?
This structure is ideal if you’re just starting out and your earnings fall within or below the basic rate of income tax.
Limited company
To set up a limited company is a little more involved as you’ll have to register with Companies House and HMRC. Before you register, you’ll have to make some decisions about how many directors there will be and what shares they hold in the business. Once complete, you’ll be a company director – get you – but it does come with more responsibilities.
How to register
You must register your limited company online via Companies House. You’ll need to choose a company name, register your office address, appoint at least one director, and allocate shares. Once set up, you’ll receive a Certificate of Incorporation and need to register for Corporation Tax with HMRC within three months.
What tax will I pay?
As a company director, you will be responsible for your business tax as well as your personal tax obligations.
Corporation tax
All limited companies must pay corporation tax on their taxable profits after tax is deducted. This is currently 19% up to an annual taxable income of £50,000, with a sliding scale up to 25% for higher profits. You can see the latest rates and allowances for corporation tax here. Companies can reduce their corporation tax bill by claiming tax-deductible expenses, such as overheads and salaries.
Personal tax
Any income you take from the company, be that a salary or dividends, will be subject to income tax (depending on your total income levels). Many directors pay themselves under the threshold for income tax and top up their earnings with dividends. A dividend is simply a share of the company’s profits, which can be paid at any time. They are taxed differently from regular income, so it can be a good way to save money, especially if your earnings are growing.
Limited company – pros and cons
Pros:
- You are a separate legal entity from your business and have limited liability. This means you are not personally liable for business debts or legal action (to a degree).
- You can potentially save tax as your earnings grow and exceed the basic rate of income tax. You can also be flexible with how you pay yourself, which can be more tax-efficient.
- Limited company status can give you more credibility with brands and agencies.
Read more about the benefits of setting up a limited company.
Cons:
- There’s a heck of a lot more admin and legal responsibilities (e.g. filing annual accounts, keeping more detailed accounting records and keeping Companies House records up-to-date).
- Company profits flow straight back into the business – but you can’t just dip into the business bank account whenever you like. There are rules around how and when money can be withdrawn, so it’s important to plan properly and keep clear business records.
- Accounting can be more complex, as you’ll need to handle corporation tax and dividends and keep separate records for the business and yourself.
Conclusion – is a limited company right for me?
This structure suits influencers with higher or growing earnings, those with employees, or those planning to scale quickly.
At a glance – differences between sole trader and limited company
| Feature | Sole Trader | Limited Company |
| Setup | Register with HMRC. Easy, quick and no charges. | Register with Companies House and HMRC. Small fee. |
| Tax | Income tax, National Insurance, (and VAT if your earnings are above £90,000 per year). | Corporation tax, VAT (if the company’s earnings are above £90,000 per year) and personal tax (on salary and dividends) |
| Accounting | Annual accounts, confirmation statement, and corporation tax return. Plus, personal tax return as a company director. | Annual accounts, confirmation statement, corporation tax return. Plus, personal tax return as a company director. |
| Administration | Minimal admin | Significant admin and legal duties |
| Liabilities | You’re personally liable | Limited liability – personal assets protected |
What happens if I don’t register with HMRC?
If you’re self-employed, earning over £1,000 per tax year and don’t register, you risk penalties from HMRC, such as fines, interest on unpaid tax, and investigations into your income.
HMRC’s digital systems are becoming more and more sophisticated, with information-sharing between banks and platforms – so don’t attempt to fly under the radar. Playing by the rules from the start is the best way to avoid stress and cost later down the line.
How can Smooth Accounting help you?
Smooth Accounting works with influencers, content creators and online entrepreneurs to help them manage their finances, stay compliant and become more profitable. We understand the unique way you earn – from affiliate links to brand partnerships – and how to make sure everything is recorded, filed and optimised.
If you’re unsure how to register, not confident about self-assessment, or want advice on switching to a limited company, we’re here to help. We can guide you through bookkeeping, expenses, VAT and personal tax so you can focus on growing your brand.
Send us a message today, and let’s arrange a call.
Thinking of a move to Dubai? Many influencers are already enjoying a sunny and prosperous life in the UAE. Smooth Accounting is a specialist Dubai tax accountant and can help you make the move.
Frequently asked questions – do influencers need to register as a business?
Is registering a sole trader business the same as completing a self-assessment tax return?
Not quite. Registering as a sole trader is the first step – you let HMRC know that you’re now self-employed. Once registered, you’ll then be required to complete a self-assessment income tax return each year to declare your income and pay any tax owed.
Do social media platforms report to HMRC about earning?
Not directly, but HMRC does have ways of finding out if your income doesn’t match your tax returns. In recent years, they’ve launched campaigns targeting online sellers and influencers.
If your bank account shows regular payments from brands or affiliate networks, but you haven’t registered for tax, you could be flagged for investigation.
Do influencers pay VAT?
Influencers can pay VAT, but it depends on how much they earn. If your total taxable income from all business activities goes over the VAT threshold (currently £90,000 a year), you’ll need to register for VAT with HMRC.
Once registered, you’ll have to charge VAT on your services – like sponsored posts, brand collaborations or digital products – and submit regular VAT returns. On the flip side, you can also reclaim VAT on certain business expenses, like equipment or software.
Even if you’re not over the threshold yet, some influencers choose to register voluntarily if it suits their business, especially if they work mostly with VAT-registered brands.
