Do you earn income from TikTok, Instagram, YouTube or other digital platforms?

HMRC are sending letters to people who they think earn income by creating content on digital platforms. We understand that HMRC have received third-party information that they have used to identify individuals who may not have told HMRC about some or all of their income from these digital platforms. This means that those who receive these letters from HMRC may owe tax and National Insurance contributions. The letters also include a certificate of tax position, which HMRC ask the individuals to complete and return to them.

The aim of the letters is to encourage people who earn income by creating content on digital platforms to bring their tax position up to date.

How do I know if I have income from creating content on digital platforms such as Instagram, YouTube and TikTok?

HMRC are targeting people who make money from their social media presence. This could include creating content on digital platforms, such as YouTube, TikTok, Patreon, or Instagram, or by being an online ‘influencer’.

If you have a successful social media presence, you might receive income for creating this content. There are many different ways to generate income on social media. For example:

• You may get money from a digital platform based on the number of views your content gets, how many followers you have or from the adverts that your followers have viewed. Examples of this are the TikTok creator fund or money from the YouTube partner programme;

• You might get money from businesses by getting people to click on links to their products that you post on social media – these are often called affiliate links;

• You might be paid by businesses to create particular content on your social media;

• You might get money via digital platforms from people signing up for a subscription to view content that you make, for example by posting videos on Patreon or YouTube;

• Some businesses might give you free products in return for you promoting them (payment in kind) on your social media.

If you receive payment in kind or a gift in exchange for promoting a product or service, then the item you receive is likely to be treated as taxable income. You would normally have to include a value for the gift or product when you are working out your income – the value will usually be the amount of money you can sell the item for.

You may be carrying out your social media activities with a view to making a profit. In this case, you are trading and HMRC say you need to register as self-employed and complete a Self Assessment tax return (if your gross income from any trading and miscellaneous sources is more than £1,000 per year).

Even if you are not carrying out your social media activities for the specific purpose of making a profit, if your gross income from those activities (plus any other trading and miscellaneous income) is more than £1,000 per year, HMRC say you still need to tell them about it.  The amounts you receive in a tax year are taxable as miscellaneous income.

What should I do if I receive a letter?

Do not ignore the letter.

You should respond to HMRC by the date stated on the letter (usually within 30 days of the date HMRC issued the letter), even if you do not have any income to tell them about.

HMRC have information that shows you may have earned money from creating content on digital platforms. They have obtained information from third parties that shows you may not have told HMRC about all of your income.

This means that your tax position may be wrong or that you may not have paid enough tax.

If you have completed Self Assessment tax returns for previous years:

You should check your previous tax returns to ensure that they are complete and correct to the best of your knowledge and belief. In particular, you should check that you have included all the income you have earned from creating content on digital platforms and deducted all the allowable expenses you have incurred.

The exception to this is if your gross income from creating content on digital platforms, and any other self-employment, trading and miscellaneous income, falls completely within the £1,000 trading and miscellaneous income allowance.

Note that you should include details of all your taxable income on your tax return. So, if you have other sources of income (such as employment income, for example), check that you have also included these.

If you have not completed Self Assessment tax returns for previous years:

You should check that you do not need to tell HMRC about the money you have made through creating content on digital platforms.

This might be the case if your gross income from creating content on digital platforms (plus any other trading and miscellaneous income) falls completely within the £1,000 trading and miscellaneous income allowance and you do not need to complete a Self Assessment tax return for any other reason.

What if I have income I need to tell HMRC about?

If you need to tell HMRC about income that you have not disclosed to them, the letter tells you to use the online Digital Disclosure Facility or Disclosure Service to do this.

You need a Government Gateway user ID and password to use the Digital Disclosure Facility. If you do not already have a user ID, you need to create one. You can do this by registering for HMRC online services.

You should tell HMRC that you intend to make a voluntary disclosure. You can do this by selecting option 1 in the ‘certificate of tax position’, or by writing separately to HMRC to advise them. You can also telephone HMRC on the number at the top of the letter or 0300 123 0998.

Whichever method you choose, you must confirm that you need to make a disclosure.

HMRC will send you an acknowledgement letter. This will tell you your Disclosure Reference Number (DRN) and your Payment Reference Number (PRN).

You should use the DRN whenever you contact HMRC about your voluntary disclosure.

You should use the PRN when you pay any tax that you owe in relation to your voluntary disclosure.

What if I do not have income I need to tell HMRC about?

If you check your tax returns or tax position and you are confident you do not have undisclosed income that you need to tell HMRC about, including the case where all of your undisclosed income is covered by the trading allowance, you should contact HMRC to let them know. You can do this by completing the certificate of tax position, writing a letter to HMRC or by telephone. Whichever method you choose, you must confirm that you do not need to make a disclosure and explain why.

If you do not respond to HMRC’s letter they are likely to follow up. They will probably send you another letter in the first instance. If you fail to respond, HMRC may decide to open a compliance check into your tax return if you have submitted one. If you have not completed a tax return, they could issue a notice to file a tax return or issue an assessment. 

Should I complete and sign the certificate of tax position?

There is no legal obligation on you to complete and return the enclosed ‘certificate of tax position’. However, as noted above, you do need to respond to the letter from HMRC.

If you complete and sign the certificate of tax position, and in doing so make a false declaration, HMRC can prosecute you. So, you should take care when completing the certificate of tax.

You may prefer to respond to HMRC by letter, particularly if your tax affairs are not straightforward.

HMRC have confirmed that they will accept a response by letter or by telephone as an alternative, if you choose not to complete and sign the certificate of tax position.

What happens next?

If you respond to HMRC confirming that you do have undeclared income, you will have 90 days from the date of HMRC’s acknowledgement letter to work out and pay any tax that you owe. You can use the Digital Disclosure Facility to work out and pay the tax.

Will I have to pay penalties and interest?

If you have to tell HMRC about income in response to their letter, they will treat your disclosure as a prompted disclosure. You may have to pay a penalty unless you can show that you had a reasonable excuse for not telling HMRC about the income, or that you made a genuine mistake (you did not tell HMRC about the income but took reasonable care to try to get your tax right).

HMRC charge interest on tax that you pay late. So, you will probably have to pay interest on any tax that you pay as a result of making a disclosure.

You can work out (‘self assess’) the penalties and interest you have to pay using the Digital Disclosure Facility. The Facility has calculators to help you with this.

What if I cannot pay all the tax I owe?

If you owe tax, but cannot afford to pay it all in one payment, contact HMRC. You can ask HMRC about setting up a Time to Pay arrangement. If HMRC agree to offer you a Time to Pay arrangement, this will spread the payments of tax that you owe over several months.

Where can I find more information and help?

An example of the letter and the certificate of tax position is available to view on the CIOT website.

We have published a news item that you might find helpful concerning how to check the tax situation if you are earning extra money.

Our self-employment guide has a case study that shows how to fill in the self-employment pages of a Self Assessment tax return.

There is HMRC guidance about how to make a voluntary disclosure on GOV.UK.

You can find more information about tax penalties on our website.

You can find more information about what to do if you cannot pay your tax bill on our website.

If you are unsure of your tax position, you should seek independent advice. If you can afford to pay a professional tax adviser, you can find more information on how to find one on our website.

If you are on a low income and cannot afford to pay for a professional tax adviser, you should contact the tax charity TaxAid, who may be able to assist you.

If your health or personal circumstances mean that you find it difficult to deal with your tax position you may be able to get additional help from HMRC’s Extra Support Team.