In the UK, influencers and social media creators frequently receive gifted products from brands as part of collaborations. These products, ranging from cosmetics and clothing to high-end gadgets, are often provided in exchange for posts, reviews, or other promotional activities. However, HMRC’s view on gifted products clarifies that not all gifts are tax-free. Understanding when these products are considered taxable is essential for influencers to avoid unexpected liabilities.
HMRC’s View on Gifted Products
HMRC (Her Majesty’s Revenue and Customs) classifies gifted products as taxable if provided with the expectation of promotion or review. Simply put, if a brand sends you a product and expects any form of social media post, video review, or acknowledgement in return, that product is likely to be viewed by HMRC as taxable income.
According to HMRC’s view on gifted products:
- Products provided in exchange for service are taxable. The tax owed will be based on the product’s market value.
- Genuine gifts without obligation may not be taxable. However, this only applies if the brand does not expect for you to promote or review the product.
When Are Gifted Products Taxable?
To determine if you need to pay tax on gifted products, ask yourself these key questions:
- Is there a contractual obligation or expectation? If the brand expects or requests a post, review, or mention of the product, the item will likely be taxable. The promotion doesn’t need to be explicitly required in a contract any implied obligation can trigger tax liability.
- What is the value of the product? High-value products or luxury items, such as designer clothes or electronic devices, are often flagged by HMRC as taxable due to their substantial value. Even if there’s a subtle promotional expectation, items over a certain value may automatically be considered part of your income.
- Does it count as compensation for services? If you’re being paid for a campaign and receive additional products on top of your fee, HMRC sees both cash and products as taxable compensation.
Valuing Gifted Products for Tax Purposes
For tax purposes, gifted products should be valued at their retail market value at the time they were provided. HMRC requires influencers to declare the value of these items as part of their taxable income if the products were received with an expectation of promotion. For instance, if a skincare brand sends you a collection of products worth £200 in exchange for a review, you’d report £200 as taxable income.
Keeping detailed records is essential. For each gifted item, note:
- Date received
- Product description and brand
- Fair market value (retail price)
- Details of any promotional obligation
Are Any Gifted Products Exempt from Tax?
Not all gifted products are automatically taxable. In some cases, you might receive items without any requirement to post or promote. If there’s no obligation, these can often be treated as genuine gifts and may be tax-exempt.
For example:
- Random or unsolicited gifts: Products sent with no prior agreement or expected promotion may not be taxable if they genuinely fall under unsolicited gifts.
- Gifts from friends or family: If items are received personally with no professional context, they aren’t part of HMRC’s taxable view.
However, to avoid any potential issues, it’s wise to consult a tax professional if you’re unsure whether an item should be declared.
Record Keeping for Gifted Products
To stay compliant with HMRC’s view on gifted products, maintaining accurate records is crucial. Having a log of all items received, their value, and related obligations will simplify the tax filing process. It’s recommended to keep both digital and physical copies of invoices, emails, or any communication with brands that detail the expectations for each product.
A well-organised record should include:
- Product name and description
- Brand and value
- Date of receipt
- Documented obligations (e.g., expected Instagram post, blog review)
Filing and Paying Tax on Gifted Products
If you determine that your gifted products are taxable, you’ll need to report the value as part of your annual income. This can be done through Self Assessment, the process through which self-employed individuals and influencers report their income to HMRC. Ensuring accurate declarations and payments is critical to avoid penalties or fines.
- Declare income: When completing your Self Assessment, report the total value of all taxable gifted products along with any other income sources.
- Pay tax due: The tax rate will depend on your overall income and which tax bracket you fall into. Basic-rate taxpayers (earning up to £50,270) will pay 20%, while higher rates apply to larger incomes.
How a Tax Professional Can Help
Navigating HMRC’s view on gifted products can be complex. By working with a tax professional familiar with influencer income, you can ensure all gifted items are handled correctly. A tax advisor can assist with:
- Determining which products are taxable
- Accurately valuing items
- Filing returns to minimise risk and maximise any allowable deductions
Conclusion
For UK influencers, being informed about HMRC’s view on gifted products is vital. If an item is received in exchange for promotion, it’s likely taxable, and proper record-keeping is key. By tracking the value of items and adhering to HMRC guidelines, influencers can maintain compliance and avoid unexpected tax liabilities.
Disclaimer
This article is for informational purposes only on influencers.accountants and does not constitute financial or tax advice. For personalised guidance, please consult a tax professional familiar with UK regulations.
