Rules and ethics
Part of Brand deals: UK creator tax reporting explained
Brand deals: UK creator tax reporting explained
How UK creators treat brand deals and gifted products as income, report profits through Self Assessment, document expenses and keep supporting records.
What to take away
- Brand deal money is trading income when you are paid regularly to promote products, whether or not creating content is your only work.
- Free products, stays and trips given in return for coverage are payment in kind, valued at their retail price in pounds.
- Profit is reported through Self Assessment, and expenses that are wholly and exclusively for the content business reduce the bill.
- VAT registration becomes compulsory above the turnover threshold, and payment in kind counts towards turnover.
When HMRC treats brand deal income as trading
A fee for a sponsored post is payment for a service. You make the content, the brand reaches an audience, and the money is trading income. Trading profits are charged to Income Tax under the Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005).
Is it a trade or a hobby?
Regular paid posts, retainers, profit motive?
Trading income, register as self-employed
Occasional deals, miscellaneous income
Occasional deals can look more like miscellaneous income. Regular paid posts, retainers and a clear profit motive point the other way, towards a trade. Affiliate commission and platform bonuses follow the same logic.
Sole trader status is normal for creators, and the steps to register as self-employed are quick once trading has started. A limited company changes the paperwork, not the underlying treatment of the income.
A hobby that produces the odd freebie is not a trade. Once money changes hands on a schedule, treat it as one.
Free products and trips: putting a pounds value on them
Gifted items are payment in kind. If a brand sends a coat worth £300 in exchange for a reel, that £300 is income, even though no cash arrives.
Valuing gifts and trips
- Value goods at retail price, not wholesale
- Keep the product page as evidence
- Count trips, hotel nights and tickets
- Save invitation email and brief
- Add cash and goods together
- Unrequested PR packages usually fall outside
Value goods at the retail price a customer would pay, not the wholesale cost the brand paid. Keep the product page as evidence of that figure.
Trips, hotel nights and event tickets count the same way. Save the invitation email and the brief, because together they show what the brand expected in return.
Cash and goods often arrive in the same deal, so add both before deciding what the arrangement was worth. Unrequested PR packages with no obligation usually fall outside the tax net, so whether gifted items are taxable turns on what was promised back.
A worked example for a sponsored reel
The figures below are illustrative, not a real campaign.
| Line | Amount | Treatment |
|---|---|---|
| Sponsored reel fee | £2,500 | Invoiced to the brand |
| Coat sent for the post | £300 | Retail value, payment in kind |
| Hotel and travel covered by the brand | £450 | Payment in kind |
| Turnover | £3,250 | Cash plus benefits in kind |
| Camera, lights and editing software | £600 | Allowable expense |
| Home studio share and phone | £150 | Allowable expense |
| Taxable profit | £2,500 | Subject to Income Tax and Class 4 National Insurance |
Tax is charged on the £2,500 profit, not on the £3,250 turnover. The £750 of costs is deductible only because it was wholly and exclusively for the content business, the test set out in GOV.UK's guidance on expenses for the self-employed.
If the coat had been sent back at the end of the campaign, its value would drop out of income, so log returns and their dates.
Registration, records and VAT
Keep each contract, the invoice you issue and a record of retail values. HMRC expects records to be kept for at least five years after the 31 January filing deadline.
Registering is a separate step from filing. HMRC has to be told that trading has started by 5 October after the end of the tax year in which the first paid brand deal landed, and the tax return is due by 31 January after that tax year ends, which is also the payment deadline. Brand deal income goes on the SA100 return, with the self-employment pages SA103.
VAT registration becomes compulsory once taxable turnover in any rolling 12-month period passes the VAT registration threshold, which GOV.UK sets at £90,000 from 1 April 2024. Payment in kind counts towards that turnover, so gifted stock and paid trips can tip a creator over the line, and a deal settled in goods rather than cash is valued for VAT at open market value rather than at the retail price used for income tax.
Registered creators add VAT to brand invoices at 20% and reclaim it on business purchases. Deal fees are then quoted net of VAT.
Once your bill passes £1,000 and too little tax has been collected at source, HMRC also asks for payments on account towards the following year. A separate business bank account is not a legal requirement, but it makes filing easier.
This article is general guidance, not advice on your own position, and unusual arrangements need a qualified adviser.
Common questions
Do I pay tax on a free product I did not ask for?
Usually not, if it arrives unsolicited and the brand expects nothing back. Once a post or a story is requested, the retail value becomes income.
Is sponsorship income taxed differently from platform ad revenue?
No. Both are trading income, though ad revenue often arrives from overseas platforms while brand deals are invoiced directly.
Can I offset costs against brand deal income?
Yes. Props, editing software, equipment and a business share of home costs reduce taxable profit, provided the spending is wholly and exclusively for the business.
Do I need a limited company for brand partnerships?
No, sole trader status suits most creators. A company can help where profits are high or a brand insists on contracting with a corporate entity.
