Category: Tax Planning

TikTok is one of the fastest‑growing platforms for creators and small businesses. With more than a billion users worldwide, it’s now a serious income stream. A recent study found that the average Brit earning money via social media makes around £1,223 a year, which is above HMRC’s £1,000 trading allowance. Yet only 44% of people say they have registered for a self-assessment tax return, and more than half don’t realise they need to pay tax on additional income or gifted items. That gap in understanding can lead to penalties and interest. Apex Accountants work with content creators every day. This TikTok tax guide explains how monetisation works, how and when UK creators need to pay tax, what reliefs and deductions are available, and why accurate reporting matters.

How TikTok Earnings Work

UK creators monetise their TikTok channels in several ways:

Creator Fund and Creativity Program

The Creator Fund paid low rates of about £0.015–£0.075 per 1,000 views, but it has transitioned to the Creator Rewards or Creativity Program, now offering higher estimates like £0.40–£1.00 (around US $0.50–$1.20) per 1,000 qualified views for UK creators, paid monthly roughly 30 days after the month ends. Eligibility requires 10,000 followers and 100,000 views in 30 days.​

LIVE Gifts and Coins

Viewers buy coins for gifts during lives, which are converted to diamonds for creators; TikTok takes a 50%+ cut, with payouts to PayPal or bank after reaching about £50 (higher than US $10), not the lower US minimums.​

Other Income Streams

Brand deals, sponsorships, TikTok Shop sales, merchandise, and paid series subscriptions/tips are all taxable as self-employment income above £1,000 annually, often requiring self-assessment registration and potential VAT if turnover exceeds £90,000. Subscriptions typically require 10,000 followers, aligning with the summary.

Is TikTok Income Taxable in the UK?

Yes. HMRC treats earnings from TikTok as self‑employment income. The tax rules for UK TikTok creators apply to cash payments, affiliate commissions, and non-cash gifts received for promoting products. HMRC’s guidance on online platforms states that income from creating videos, podcasts or social‑media influencing counts towards your trading income, and you must declare it if your total trading income (from all side hustles) exceeds the £1,000 trading allowance. Gifts and services must be valued at their market value and included as income.

You usually don’t need to tell HMRC if all of the following are true:

• Your total self‑employment income (from TikTok and other side hustles) is under £1,000 in the tax year (6 April–5 April).
• You don’t already file a Self‑Assessment return for other reasons.

This £1,000 trading allowance is not per activity – it covers all your side hustle income combined. If you earn more than £1,000, you must register for Self‑Assessment and file a tax return. The personal allowance of £12,570 (2025/26) means you won’t pay income tax until your total income exceeds that threshold. However, you still need to report your income so HMRC can see that you’re within the allowance.

Gifts are income too

Many creators receive free products or services in exchange for content. HMRC treats these perks as taxable income. The value you must include on your tax return is the fair market value of the item or experience. Failing to report freebies is one of the most common mistakes we see.

Digital platform reporting – HMRC can see your earnings

From 1 January 2024, TikTok has been sharing information about UK creators’ earnings with HMRC, including payouts from the Creator Fund, Creativity Program and TikTok Shop sales. Similar rules apply across many platforms and are being rolled out worldwide. HMRC uses this data to cross‑check your tax return, so it’s much harder to hide income. That’s why accurate records and timely filing are critical.

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When to register and report

You need to register for Self‑Assessment if your total self‑employment income (TikTok plus any other freelance work) exceeds £1,000 during the tax year. Registration must be done by 5 October following the end of the tax year. For example, if you exceeded the allowance in the 2025/26 tax year (ending 5 April 2026), you must register by 5 October 2026.

As per tax rules for UK TikTok creators, key reporting dates:

Self‑Assessment isn’t just for income tax. It also calculates National Insurance contributions (NICs) for the self‑employed. In 2024/25, compulsory Class 2 NICs will be abolished. For 2025/26, you’ll mainly pay Class 4 NICs, charged at 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270. These NICs are included in your Self‑Assessment bill.

Does HMRC check TikTok?

Yes. HMRC has powers to investigate undeclared income and will increasingly rely on data from platforms. The digital platform reporting rules mean TikTok sends UK earnings data directly to HMRC. HMRC also uses “badges of trade” to decide whether your activity is a hobby or a business, looking at factors like profit motive, regularity of transactions and commercial organisation. If your content generation looks like a business, you must pay tax. Penalties for failing to declare income can include interest and fines.

How TikTok tax is calculated

The amount of tax you pay depends on your taxable profit (income minus allowable expenses) and which tax bands your income falls into. For the 2025/26 tax year, the rates for England, Wales and Northern Ireland are:

Your personal allowance reduces by £1 for every £2 of income over £100,000, so high earners can lose the allowance entirely.

Sample calculations of tax on TikTok earnings

To illustrate, the table below shows simplified examples assuming the creator has no other income and claims actual business expenses. National Insurance is calculated using Class 4 rates (6% between £12,570 and £50,270; 2% above). Figures are rounded.

** These numbers are indicative only and may change as per your personal circumstances.

How the modest earner’s bill is worked out

Income of £20,000 minus expenses of £5,000 leaves a profit of £15,000. After the personal allowance (£12,570), only £2,430 is taxable. Tax at 20% on that amount is £486, and Class 4 NICs at 6% on the same £2,430 add around £146 (total ~£632). National Insurance stops once your profits fall below £12,570.

The growing creator with profits of £50,000 pays tax on £37,430 after deducting the personal allowance. All of that is in the basic rate band, so the income‑tax bill is about £7,486. Class 4 NICs at 6% on £37,430 add around £2,246 (total ~£9,732). A high earner with profits of £100,000 pays 20% on the first £37,700 and 40% on the rest, resulting in an income‑tax bill of £27,432 and Class 4 NICs of about £3,257, giving a total around £30,689.

These calculations assume all other income falls within the same tax year and that the personal allowance is fully available. In practice, your total tax depends on your overall income, any other reliefs or allowances, and payments on account. Always seek professional advice for complex situations.

TikTok Tax Relief and Deductions

You can reduce your taxable profit by claiming legitimate business expenses. HMRC allows you to deduct actual expenses or claim the £1,000 trading allowance – not both. The allowance is often useful for small creators with minimal costs, but most professionals save more by deducting specific expenses. Common deductions include:

• Equipment and software: Laptops, cameras, smartphones, lighting, microphones and editing software.
• Phone and internet bills: Apportion the business use of your mobile or broadband. Only the business proportion is deductible.
• Home‑office costs: You can claim a proportion of rent, mortgage interest, utilities and council tax, or use HMRC’s simplified flat‑rate method. Beware of capital‑gains‑tax implications if you claim a permanent home office.
• Props and materials: Clothing, make-up, craft supplies, backdrops and other items used solely for your videos.
• Travel and subsistence: Transport to shoots, meetings or events, hotel costs and reasonable meals. Keep receipts and apportion journeys that have a personal element.
• Marketing and subscriptions: Costs of website hosting, paid ads, design software, social‑media management tools and professional training courses.
• Professional fees: Accountants, photographers, videographers, editors and legal advice.
• VAT on expenses: If your total taxable turnover exceeds £90,000 (the VAT registration threshold), you must register for VAT. VAT‑registered creators can reclaim input VAT on business purchases.

Remember that mixed‑use items must be split between personal and business use, and you should maintain clear records. Gifts you receive for promotions are taxable income but not deductible as an expense; you cannot claim the cost of free products against tax.

How We Handle Your Tax Matters

At Apex Accountants, we specialise in helping influencers and digital entrepreneurs navigate the tax maze. Our services include:

• Self‑Assessment preparation and filing: We handle your tax return, ensuring all TikTok income and allowable expenses are correctly reported.
• Expense tracking and bookkeeping: We set up robust systems so you can capture income, gifts and receipts without stress. This protects you if HMRC questions your figures.
• VAT registration and compliance: We assess whether you need to register and manage your quarterly returns.
• National Insurance and pension planning: We advise on NIC obligations and help you maintain your state pension record.
• Incorporation advice: If your earnings grow, we can advise on whether switching from sole trader to limited company would reduce your tax bill and protect your assets.
• Tax planning and forecasting: Using your data, we project future liabilities and suggest ways to reduce tax legally, from claiming reliefs to spreading income.

We understand the creative economy and the tax on TikTok earnings. Whether you’re a micro‑influencer or running a full‑time TikTok business, Apex Accountants provides the support you need to stay compliant and maximise your earnings.

FAQs About TikTok Tax in UK

1. Can I be employed and earn money on TikTok?

Yes. You can have a full‑time job under PAYE and still earn money on TikTok. However, PAYE does not cover your TikTok tax. If your side‑hustle income exceeds £1,000, you must register for Self‑Assessment and pay any tax due yourself.

2. Do I need to register as a business?

If your income from TikTok or other freelancing exceeds £1,000, you must register as a sole trader with HMRC and file a tax return. Many creators operate as sole traders, but if your profits are significant, you might benefit from forming a limited company for liability protection and potential tax efficiency. Speak to an accountant to assess your situation.

3. What about VAT and TikTok?

You only need to register for VAT if your taxable turnover (including TikTok Shop sales and sponsorships) exceeds £90,000 in a 12‑month period. Once registered, you must charge VAT on qualifying supplies and submit quarterly VAT returns. Some creators voluntarily register early to reclaim input VAT on equipment.

4. Are gifts taxable?

Yes. Gifts and free services received in exchange for content count as income and must be included at their fair market value. You cannot deduct the value of gifts, but you can claim related expenses (e.g., postage for giveaways).

5. Do I pay tax on money I haven’t withdrawn yet?

UK taxes operate on an accrual basis – you pay tax on income when it is earned, not when you withdraw it. Income credited to your TikTok balance counts as taxable income even if you leave it on the platform. Keep screenshots or statements showing dates and amounts.

6. What records should I keep?

Maintain a spreadsheet or use accounting software to log all income and expenses, including the value of gifts. Create separate categories (e.g., Creator Fund, brand deals, shop sales) and save invoices, contracts and screenshots. HMRC requires you to keep records for at least five years after the 31 January filing deadline.

7. Can I claim the trading allowance and actual expenses together?

No. You must choose either the £1,000 trading allowance or your actual expenses. If your expenses exceed £1,000, it’s usually better to claim actual costs. If your costs are lower, the trading allowance can simplify reporting.

8. Does my income matter if I reinvest everything into the business?

Yes. Reinvesting earnings does not remove your tax liability. You’re taxed on profits after deducting allowable expenses, not on what you withdraw. Good recordkeeping and tax planning can help you optimise cash flow.

Conclusion

TikTok offers exciting opportunities, but earning money from the platform comes with tax responsibilities. UK creators must report income above the £1,000 trading allowance, keep records of cash and non‑cash payments, and understand that TikTok shares earnings data with HMRC. The amount of tax you pay depends on your profits, tax bands and National Insurance contributions. By claiming legitimate expenses, tracking gifts, and meeting deadlines, you can minimise your bills and avoid penalties. If you’re unsure about your obligations or simply want more time to focus on content, Apex Accountants can help. Contact us today to ensure your TikTok success doesn’t become a tax headache.

With income‑tax thresholds frozen until April 2031, millions of people will pay more tax even if rates stay the same. These changes are being called fiscal drag or a “stealth tax” because earnings rise with inflation, but tax bands do not. As wages and pensions grow, more people cross these thresholds and face a rise in UK tax bills.

Chancellor Rachel Reeves extended the freeze in her November 2025 Budget so that income tax and National Insurance bands will not rise until 2030–31. At the same time, she cut the additional rate threshold to £125,140 and increased the dividend, property, and savings tax rates by two percentage points. The Office for Budget Responsibility (OBR) estimates that about five million extra people will be pulled into higher tax bands by 2031.

This guide looks at all tax bills that are rising in 2026 and beyond and sets out legal ways to pay less tax. Apex Accountants encourage readers to plan early and seek professional advice – the rules are complex and subject to change.

Why are UK tax bills rising until 2031?

Thresholds frozen until 2031

Personal allowances (£12,570), the higher‑rate threshold (£50,270) and the additional‑rate threshold (£125,140) are frozen until April 203. Because wages and pensions usually rise each year, more of your income falls into the higher bands – this is known as fiscal drag.

Read more: How the income tax threshold freeze affects taxpayers

Dividend tax increase

From April 2026 on, the basic rate of tax on dividends will rise from 8.75% to 10.75% and the higher rate from 33.75% to 35.75%; the additional rate stays at 39.35%. A Reuters report confirms that this two-percentage-point increase affects savings, property, and dividend income.

Dividend and capital‑gains allowances cut

The tax‑free dividend allowance fell from £2,000 in 2022/23 to £1,000 in 2023/24 and £500 in 2024/25. The capital gains tax (CGT) annual exempt amount is £3,000 from April 2025.

ISA changes

The overall ISA allowance remains £20,000, but from April 2027 on, adults under 65 will only be allowed to put £12,000 in cash ISAs; the rest must be invested in stocks and shares. Junior ISAs continue to allow £9,000 per child.

Find out: How new ISA rules influence financial security

Savings tax rise in 2027

The personal savings allowance remains £1,000 for basic rate taxpayers, £500 for higher rate taxpayers, and zero for additional rate taxpayers. However, from the 2027/28 tax year, the tax on interest outside an ISA will rise by two percentage points: the basic rate will increase to 22%, the higher rate to 42% and the additional rate to 47%.

Salary sacrifice limit

From April 2029 only the first £2,000 of salary‑sacrificed pension contributions each year will be exempt from National Insurance contributions. Contributions above this will be subject to employer and employee NICs.

High Income Child Benefit Charge

The threshold at which child benefit is clawed back increased to £60,000 for tax years from 2024/25 onwards. Families with adjusted net incomes above £60,000 will pay back some or all of the benefit.

All Tax Bills That Are Rising In 2026 and Beyond

Practical Example of The Rise In UK Tax Bills

Someone earning £35,000 in 2020 would have paid tax mostly at the basic rate. By 2031, if their salary rises to £45,000 through normal pay increases, a much larger portion of their income is taxed, even though tax rates have not changed. Because the personal allowance remains frozen at £12,570, more of their earnings fall into taxable bands each year.

Over the freeze period, this worker pays several thousand pounds more in income tax than they would have if allowances had risen with inflation. This increase happens without any official tax rise, purely due to frozen thresholds.

Practical and Legal Ways To Pay Less Tax in 2026

Increase your pension contributions

Pension contributions attract tax relief and reduce your taxable income. A basic‑rate taxpayer contributing £10,000 receives a 20% government top‑up, while a higher‑rate taxpayer can claim an extra 20% through their tax return. For high earners near £100,000, extra contributions can bring your income below the threshold where the personal allowance tapers away.

Use salary‑sacrifice schemes before 2029

Swapping part of your salary for pension contributions or benefits such as electric cars or cycle‑to‑work schemes reduces both income tax and NICs. From April 2029 on, the NIC-free amount is limited to £2,000, so consider boosting your contributions before then or exploring other benefits.

Claim the marriage allowance

If one spouse earns below the personal allowance (£12,570) and the other is a basic‑rate taxpayer, the lower earner can transfer £1,260 of unused allowance to the higher earner, saving up to £252 a year.

Use your ISA allowance and plan for the cash cap

Invest up to £20,000 each year in ISAs – interest, dividends and gains are tax-free. Under‑65s should plan to use more of the stocks and shares ISA allowance from April 2027 because cash ISAs will be limited to £12,000. Consider splitting savings across cash and investment accounts to maintain flexibility.

Optimise your personal savings allowance

Hold savings in the name of the lower‑earning partner to use the larger personal savings allowance (up to £1,000 for basic‑rate taxpayers). For higher-rate taxpayers, the allowance drops to £500 and disappears entirely once their income exceeds £125,140.

Manage capital gains and dividends

• Realise gains up to £3,000 each tax year to use the CGT allowance.
• Offset gains with capital losses, which can be carried forward indefinitely.
• Transfer assets to a spouse in a lower tax band to use their allowances and lower CGT and dividend tax rates.
• Hold dividend‑paying assets in ISAs or pensions to avoid the higher rates that come into effect in April 2026.

Make charitable donations (Gift Aid)

Donations to charity through Gift Aid allow charities to claim 25p for every £1 you donate. Higher‑rate taxpayers can reclaim the difference between their rate and the basic rate via self‑assessment. Gift Aid donations also increase your basic‑rate tax band, meaning more of your income is taxed at 20% instead of 40%.

Plan around the High Income Child Benefit Charge

If your adjusted net income is approaching £60,000, pension contributions or Gift Aid donations can reduce your income and preserve child benefit. You can also elect for your partner to receive the benefit and pay the charge through their tax return.

Use inheritance‑tax allowances and gifting

Give away up to £3,000 per year, make small gifts and use trusts or pensions to pass wealth outside your estate. Combine the nil‑rate band and residence nil‑rate band to pass up to £1 million tax‑free.

How We Can Help You Plan Better Amid Rising UK Tax Bills

Apex Accountants is a full‑service firm offering tailored advice to individuals and businesses. Our tax specialists can help you:

• Personal tax planning: 

We review your income, allowances, and relief to structure your finances efficiently, prepare your self-assessment return, and advise on pension and ISA strategies.

• Inheritance‑tax and estate planning: 

We create gifting strategies, establish trusts, and guarantee the tax-efficient structuring of wills and life insurance policies. Our goal is to protect your wealth for future generations.

• Business and corporation‑tax advice: 

Our guidance helps companies claim all allowable expenses, such as capital allowances and R&D relief. We also provide advice on salary-sacrifice arrangements, shareholder remuneration, and restructuring benefits for directors.

• Payroll and salary sacrifice: 

Our payroll team implements salary‑sacrifice schemes and monitors National Insurance changes. We will help you maximise your NIC savings before the £2,000 cap takes effect.

• Investment and pension planning: 

Working with regulated financial advisers, we can help you align your investments, pensions and ISAs with your long‑term goals and minimise tax on dividends and capital gains.

• Compliance and reporting: 

We ensure your business or personal affairs comply with HMRC rules, including the new quarterly reporting requirements and Making Tax Digital obligations.

Conclusion

The tax landscape in the UK is shifting. Frozen income‑tax thresholds until 2031, rising dividend and savings taxes, cuts to allowances and new caps on salary‑sacrifice relief will gradually increase the tax burden on workers, investors and families. Nevertheless, there are many legal tools to reduce your bill: boosting pension contributions, using ISAs and personal allowances, claiming the marriage allowance, gifting assets and donating through Gift Aid can all make a meaningful difference. Understanding fiscal drag and planning around key thresholds – such as £50,271, £100,000 and £60,000 – is essential.

At Apex Accountants, we combine our deep knowledge of UK tax law with personal advice. You can secure your financial future and keep more of your money by taking action early and using your allowances annually. Contact us today to discuss how we can help you navigate the 2026 tax changes and beyond.

FAQs About UK Tax Rise 

1. Are taxes increasing in the UK?

Tax rates have not risen widely, but frozen income tax thresholds mean more people pay higher tax as wages increase. This effect, known as fiscal drag, raises tax bills.

2. How can I reduce my income tax bill with thresholds frozen?

You can reduce income tax by increasing pension contributions, using salary sacrifice, claiming marriage allowance, checking your tax code, and keeping taxable income below higher tax bands.

3. How to avoid the 60% tax trap in the UK?

The 60% tax trap affects incomes between £100,000 and £125,140. Pension contributions, Gift Aid donations, and salary sacrifice can reduce adjusted income and preserve your personal allowance.

4. What salary pays 40% tax in the UK?

The higher rate of income tax applies once taxable income exceeds £50,271. Earnings above this level are taxed at 40% until reaching the additional rate threshold.

5. Is the UK the highest-taxed country in Europe?

The UK is not the highest-taxed country in Europe. Several EU nations have higher overall tax burdens, but frozen thresholds mean UK workers face rising effective tax rates.

6. What are the best uses of my ISA allowance?

ISAs protect savings, dividends, and investment gains from tax. Using the full £20,000 allowance helps shield income, especially as dividend and savings taxes continue rising.

7. How do I minimise dividend and investment taxes?

Holding investments inside ISAs or pensions avoids dividend and capital gains tax. Using annual allowances, spreading asset sales, and transferring assets to a lower-earning spouse can also reduce tax.

8. What is fiscal drag, and why does it matter?

Fiscal drag happens when tax thresholds stay frozen while incomes rise. It quietly pushes people into higher tax bands, reducing take-home pay without any official tax rate increase.

9. How does frozen tax affect child benefit?

If adjusted income exceeds £60,000, Child Benefit is gradually withdrawn. Pension contributions and Gift Aid donations can reduce adjusted income and help retain some or all benefits.

10. How can I reduce inheritance tax liability?

You can reduce inheritance tax through annual gifting allowances, seven-year gifting rules, residence nil-rate bands, and life insurance written in trust. Early planning makes the biggest difference.