Tax for UK UGC creators: Self Assessment, VAT, gifted products and expenses

Plenty of creators start UGC as a side project and only think about tax when the first decent invoice lands. That is fine, as long as you get organised before the deadlines. This guide covers the basics for creators working as sole traders in the UK. It does not cover limited companies in depth, and the thresholds below are correct at the time of writing: always check the current figures on GOV.UK.

Are you self-employed?

If you make videos for brands and invoice them yourself, you are almost certainly running a business as a sole trader, even if you also have a full-time job. HMRC looks at whether you are trading: doing work for payment, regularly, with the intention of making a profit. One-off hobby income can be different, but a creator pitching brands and sending invoices is trading.

The £1,000 trading allowance

At the time of writing, if your total gross trading income in a tax year (6 April to 5 April) is £1,000 or less, you do not need to register or tell HMRC about it. "Gross" means before expenses. That covers all your self-employed income together, not just UGC.

Above £1,000, you must register for Self Assessment. You then choose either to deduct the £1,000 allowance from your income, or to deduct your actual business expenses. You cannot do both. If your real expenses are higher than £1,000, claim the expenses.

Registering and the key deadlines

• Register for Self Assessment by 5 October after the end of the tax year in which you started. If you started in, say, June 2026, the tax year ends 5 April 2027 and you would register by 5 October 2027.
• File your online return by 31 January after the tax year ends.
• Pay what you owe by the same 31 January.
• Payments on account: once your bill passes a certain level, HMRC asks for advance payments towards next year's bill, due 31 January and 31 July. The first year this kicks in can be a shock, because you pay last year's bill plus half of next year's at once. Plan for it.

Missing the filing deadline brings an automatic penalty even if you owe nothing, so file on time.

Making Tax Digital

Making Tax Digital for Income Tax is being phased in for sole traders and landlords, starting with people whose qualifying income is above £50,000 from April 2026, with lower thresholds following in later years. If it applies to you, you will need compatible software and quarterly updates. Check GOV.UK to see whether and when you are in scope.

What counts as income

• Fees for videos, usage licences, whitelisting and raw footage.
• Affiliate commission and platform payouts, if you have them.
• Gifted products in many cases. This catches people out.

Gifted products

HMRC's guidance for social media influencers says that if you receive goods or services in return for doing something, such as making content, their value can count as income. If a brand sends a product with no obligation at all to post or create anything, it is generally treated differently. In UGC, products usually arrive because you are filming with them, so treat them as part of the deal and record their value. Keep the delivery note or an online listing showing the price.

The safe habit: log every product that arrives for a job, note its retail value and the deal it belongs to, and check HMRC's influencer guidance for your situation.

Expenses you can usually claim

Allowable expenses are costs that are wholly and exclusively for your business. For UGC creators that often includes:

• Equipment: lights, microphones, tripods, backdrops. A phone or laptop used partly for personal things can be claimed for the business share only.
• Software and subscriptions: editing apps, cloud storage, music licensing, and business tools.
• Props and products you buy specifically for a shoot.
• Phone and internet: the business proportion.
• Working from home: either a flat-rate simplified amount based on hours worked at home, or a reasonable share of household bills.
• Travel to shoots or meetings (not your normal commute to a regular workplace).
• Professional fees: accountant, contract review.

Things that usually do not count: clothes you would wear anyway, makeup for everyday use, and personal portions of shared costs. If an item is genuinely only used on camera, keep a note of why.

Keep receipts and records for at least five years after the 31 January deadline for that tax year.

National Insurance

Sole traders pay Class 4 National Insurance on profits above a threshold, calculated through your Self Assessment return. Class 2 has changed in recent years and is now mostly voluntary for people with profits below the threshold, which can still be worth paying to protect your State Pension record. The figures change most tax years, so check GOV.UK.

VAT

At the time of writing, you must register for VAT if your VAT-taxable turnover goes over £90,000 in any rolling 12-month period, not just the tax year. Most creators will not hit this early on, but watch it if you scale up, especially because usage fees and raw footage add up quickly.

Once registered, you add VAT to your invoices and file VAT returns. Some creators register voluntarily below the threshold; it can make sense if your clients are VAT-registered businesses that can reclaim it, but it adds admin. Talk to an accountant before deciding.

If you invoice brands outside the UK, VAT rules for services can differ. Get advice if a large part of your work comes from abroad.

Set money aside from every invoice

The simplest habit that prevents a bad January: move a percentage of every payment into a separate savings account the day it arrives. Many people use a rough figure such as 20 to 30% of profit, depending on their other income and tax band. It is a buffer, not an exact calculation. If you also have a salaried job, your UGC income is taxed on top of it, so your rate could be higher than you expect.

Invoices that make tax easier

Good invoices are also good records. Each one should show:

• Your name (or business name) and contact details
• The client's business name and address
• A unique invoice number, in sequence
• Invoice date and due date
• What you delivered, including the usage licence
• The amount, and VAT details if you are registered
• How to pay you

Cronyx can create invoices from a deal and chase unpaid ones automatically, which helps keep numbering and dates consistent. Whatever you use, keep one list of every invoice, when it was paid and into which account. At year end that list is most of your return.

Should you go limited?

Some creators set up a limited company once profits grow, because the way company profits and dividends are taxed can work out cheaper. It also brings more admin: company accounts, a corporation tax return, payroll if you pay yourself a salary, and stricter rules on taking money out. It is a decision to make with an accountant, not on the basis of a social media post.

A simple yearly routine

1. Log every deal, invoice and gifted product as it happens.
2. Keep receipts for expenses in one folder.
3. Move a tax percentage from each payment into savings.
4. After 5 April, total income and expenses for the year.
5. File by 31 January and pay what is due.

For the rest of the money side, see how much to charge for UGC in the UK and our UGC contract checklist.

This is general information, not tax advice. Thresholds and rules change; check GOV.UK or speak to an accountant about your own situation.