Influencers receiving goods: the tax consequences you may not have thought about
If you’re in the world of influencer marketing, you’ll know how common it is for brands to compensate creators with alternatives to cash – products, experiences or assets – in exchange for posts and endorsements.
But what may seem like a gift is generally not seen that way by HMRC, and could land you with a UK tax bill.
The principle behind this
When you receive goods or services in return for promotional activity, HMRC are likely to regard the arrangement as a barter transaction. In other words, you supplied marketing services and have been paid in kind rather than in cash. The value of what is received is therefore treated as trading income that you need to pay income tax on.
Value has an impact. In most cases, the taxable amount will be based on the market value of the goods or services received. For a car, this would usually be its open market value. For a hotel stay or experience, it would normally be the amount that an ordinary customer would have paid.
How this works in practice
As an example: a car manufacturer provides you with the use of a vehicle in exchange for a series of social media posts:
- You must generally recognise income equal to the market value of the benefit received
- If ownership of the vehicle is transferred, the taxable amount is likely to be the vehicle’s market value at the time it is provided
- If you merely receive the use of the car for a period, the taxable value will instead be based on the value of that use
The fact that no money changes hands does not remove the tax liability.
The same principle applies to other non-cash benefits. Gifted products, free hotel stays, flights, event tickets, beauty treatments and similar arrangements may all be taxable where there is an expectation that you will promote the brand or create content in return.
HMRC’s focus is on the substance of the arrangement rather than what those involved call it. Labelling an item as a ‘gift’ will not prevent it from being taxable if there is a commercial give-and-take.
Saving stress by staying ahead
It may sound obvious, but because the aim of an influencer is to promote a product or service online, there will be a permanently visible online record of any items you have received. HMRC can see this too, and are able to check against tax records (including quarterly Making Tax Digital submissions).
Neglecting to report non-cash income may expose you to interest, penalties and HMRC enquiries.
To avoid last-minute panics, you should keep detailed records as you go of all non-cash benefits received, including:
- Correspondence with brands
- Evidence supporting the valuation adopted
An accountant can help you to get a good process for this.
It’s also worth pausing to consider whether a ‘gift’ is worth accepting in the first place, so you’re not paying tax on an item or service that you didn’t actually want!
Circumstances where there may be no tax charge
Genuine unsolicited gifts, with no expectation of promotion or publicity, are less likely to be seen by HMRC as taxable income.
This will depend on the facts. If you receive a product solely because of your business activities and audience reach, HMRC may argue that it forms part of the trade even where there is no formal written agreement.
This is another area where advice from an accountant can help you to know where you stand.
Why you should consider VAT in advance
If you’re VAT-registered, the tax can get more complicated.
HMRC generally treat a barter arrangement as two separate supplies:
- The influencer supplies advertising or marketing services to the brand
- The brand supplies goods or services to the influencer
As a result, you may be required to account for output VAT (at 20%) on the value of the services provided, even though you have received no cash payment. For example, if you receive a car worth £60,000 in exchange for promotional services, the taxable value of the services may also be £60,000, creating an output VAT liability of £12,000.
Unless the agreement specifically provides for an additional cash payment to cover the VAT, you may need to fund this liability personally.
This makes it a good idea to negotiate a VAT gross-up clause within brand agreements, requiring the brand to pay you an additional amount equal to any VAT due on the services supplied. Otherwise, you could find yourself with a big tax bill arising from an otherwise attractive non-cash arrangement.
These items will also constitute VATable turnover when assessing if you have gone over the VAT registration thresholds.
The key thing to remember
Assume that goods or services you receive in exchange for content creation are taxable unless there is clear evidence that they’re not taxable. A ‘free’ car or other high-value item can make you liable for a lot of tax.
If you haven’t thought about record keeping and tax planning, this is a good reason to start.
How BKL can help
Our specialists enjoy working with ambitious people across music, media, sport and entertainment.
We can help you to understand and plan for the tax consequences of your activities, including products and services you receive – giving you more freedom to focus on growing your profile in a competitive online world.
For a chat about how we can help you, get in touch with Tim using the form below.
Contact Tim
Frequently asked questions: tax consequences for influencers receiving non-cash income
How do HMRC tax products, experiences or assets given to influencers?
HMRC generally treat goods, services and experiences received in return for promotional activity as taxable income. If an influencer provides marketing, advertising or endorsement services and receives something of value in exchange, HMRC are likely to view this as payment in kind rather than a gift.
This means the market value of the item or benefit received will usually need to be included as trading income. The tax treatment applies whether the compensation is a luxury product, event access, accommodation, travel, technology, or another non-cash benefit.
Are gifted products always taxable for influencers?
No. Genuine unsolicited gifts with no expectation of promotion, publicity or content creation are less likely to be taxable.
However, the distinction is often not straightforward. If a brand sends products because of an influencer’s audience, profile or commercial activities, HMRC may argue that the benefit relates to the influencer’s trade. Even where there is no formal contract, an expectation of coverage, tagging, reviews or social media exposure can indicate that a taxable arrangement exists.
What counts as a barter transaction for influencers and content creators?
A barter transaction occurs when services are exchanged for goods, services or other benefits instead of cash.
For influencers, this commonly arises when social media content, brand endorsements, reviews or promotional posts are provided in exchange for products, travel, accommodation, event access or other benefits. HMRC generally treat the arrangement as if both sides had charged each other for their respective supplies, meaning the value received can become taxable income and may also have VAT implications.
How should influencers value non-cash benefits for tax purposes?
In most cases, the starting point is the market value of what was received. This is generally the amount an ordinary customer would have paid for the item or service.
For example, a hotel stay would typically be valued at the normal room rate, while a designer product would usually be valued at its retail price. Where valuable assets such as vehicles are involved, evidence supporting the valuation used should be retained. Keeping ongoing records can help support the position taken if HMRC later review the return.
What records should influencers keep when receiving gifted items or brand benefits?
Influencers should retain clear records of all products, services and experiences received through their business activities.
Useful records include contracts, emails, direct messages, campaign briefs, invoices, valuation evidence, screenshots of posts and details of when benefits were received. Good record-keeping can make it easier to prepare tax returns, support valuations and respond to HMRC enquiries. It also helps influencers assess the true after-tax value of proposed collaborations before accepting them.
Do influencers need to register for VAT if they receive gifted goods instead of cash?
Potentially, yes. The value of goods and services received through barter arrangements can contribute towards VATable turnover.
Influencers approaching the VAT registration threshold should monitor both cash income and non-cash consideration carefully. A creator who receives significant products, travel benefits or other high-value compensation may reach the registration threshold earlier than expected. This can be particularly important for influencers experiencing rapid growth or working with major brands.
Why can VAT be a problem in influencer barter deals?
VAT can create a cashflow challenge because a VAT-registered influencer may owe output VAT even when no cash has been received.
In a barter arrangement, HMRC generally treat the influencer’s marketing services as a taxable supply. As a result, VAT may be due on the value of those services. Without careful contract drafting, the influencer could face a VAT bill that must be funded from their own resources. For this reason, many influencers seek contractual provisions requiring the brand to pay an additional amount to cover any VAT liability.
Is it worth accepting a high-value gifted item if it creates a large tax bill?
Not always. The commercial value of a collaboration should be assessed after considering tax and VAT consequences.
A product that appears attractive on paper may become significantly less appealing if it generates income tax, National Insurance obligations or VAT costs. Influencers should consider whether they genuinely want or need the item, whether they could otherwise have monetised the campaign with a cash fee, and the overall financial impact before agreeing to the arrangement.
Can influencers, YouTubers, TikTok creators and bloggers all be affected by the same rules?
Yes. The tax principles generally apply regardless of platform or content format.
Whether someone earns income through Instagram, TikTok, YouTube, Twitch, a blog, podcast or another digital channel, HMRC focus on the substance of the arrangement rather than the platform used. If promotional services are being provided in exchange for non-cash compensation, similar tax considerations are likely to arise. As influencer businesses become more sophisticated, proactive tax planning and compliance become increasingly important.
Is a written contract required for HMRC to consider a gifted item taxable?
No. A formal written agreement is not essential for a tax liability to arise.
HMRC will typically consider the facts and circumstances surrounding the arrangement. Emails, messages, campaign discussions, content requirements or an established expectation of promotion may all help demonstrate that a commercial exchange has taken place. This is a common area of misunderstanding, as many creators assume that the absence of a signed contract means no taxable income exists. In practice, HMRC are more interested in the substance of the arrangement than the paperwork supporting it.
