TikTok famous, tax confused? The 2025 UK accountant’s survival guide for creators

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Imagine you have gone TikTok-viral, with millions of views, brand deals rolling in, and gifted luxury hauls piling up. All this fame and moment of luxury feels like a dream come true until HMRC’s notice knocks on your door, demanding details on your “trading income.” Seeing this official notice, of course, you will panic.

Hence, to help ease your anxiety about taxes, we have curated this 2025 survival guide, designed for TikTok creators in the UK. This piece covers creator-specific challenges, starting from taxable gifts to erratic earnings and deductible equipment. Whether you are a full-time creator or a side-hustler, give this a read.

Table of Contents

Step 1: Confirm your status – “Are you self-employed?”

Before diving into tax deductions, let’s confirm your working status first, i.e., if you fall under the taxable category. According to HMRC, you are categorized as self-employed if your TikTok activities count as “trading”, like brand deals or merch sales.

Trading threshold: If you earn over £1,000 gross trading income in a tax year, you must voluntarily register with HMRC as a self-employed individual within three months.
Tax-free allowance: Gross income under £1,000? While trading allowance is tax-free, you can’t deduct expenses.
Tax rates: Profits surpass the £12,570 threshold? You are liable for personal allowance (frozen until 2028), income tax (basic at 20% to higher at 45%), and national insurance adds another 6-9%.
Platform reporting: Under the OECD digital platform rules, TikTok directly reports earnings to HMRC, so hiding income or misrepresenting isn’t an option.
Penalties: Late registration or filing? You may face fines of up to £100, plus 5% of unpaid tax every month.

What should you do? As soon as you reach the threshold earnings, register on the authorized platform on time. It’s a rather quick process and unlocks expense reliefs. Then, visit HMRC’s website to confirm the status.

For side-hustlers, if totaling your income, i.e., a £500 brand deal and £600 in affiliate links, pushes you over the threshold, you might as well get registered.

Step 2: Classifying income streams – From brand deals to gifts

TikTokers have multiple income sources, the Creator Fund, affiliate links, and sponsored posts. However, they are tax-heavy. Every type of monetized content counts as trading income, including non-cash payments valued at market rates.

- Brand deals: You must declare full fees in the tax report. When it comes to income from brand deals:
  - Sole traders face up to 45% income tax,
  - Limited companies pay 25% corporation tax on profits over £50,000.

Gifted items:
- Unsolicited hampers (e.g., a random beauty box) are usually tax-free.
- Promotional gifts are treated as barter income at retail value.
- Receiving gifts worth over £50 from one brand within 12 months or tied to a promotion triggers VAT and income tax.
TikTok live gifts: Virtual “roses” convert to cash, but they face a 75% VAT loss without MOSS registration for EU fans.
Affiliates & Ads: Remember to deduct platform fees before you declare net income. Otherwise, those “sponsored” yacht trips will be counted as red flags.

Action: Create spreadsheets to track your income accurately and sort them by date, value, and promotion details. You can also use tools like QuickBooks to set aside 20-30% quarterly for taxes.

Step 3: Managing inconsistent income – The averaging lifeline

As much as the volatility of digital fame, TikTok’s algorithm is the same. One month you are handling £10k, the next, maybe nothing. You may assume this inconsistency to be nothing, but they can inflate tax bills in big years. Fortunately, HMRC’s averaging relief, designed for “literary or artistic” creators (including original video content), eases the burden.

Eligibility: This relief only applies to earnings from creations (e.g., licensed videos, royalties), not services. To claim this relief, your income must fluctuate by more than 75% between consecutive years (e.g., £40k vs. £10k).
How does it work?
- First, you have to average two years’ profits (total ÷ 2). Example: £40,000 (2023-24) and £10,000 (2024-25) become £25,000 each.
- Then, adjust the current return upward by £15,000, while reclaiming overpaid tax from last year.
Limitations: While losses are treated as zero for averaging, they are carried forward. No NIC adjustments, though.

Action: You can claim the relief via the 2024-25 Self Assessment. If profits shift during the year, revise your prior claims.

Step 4: Claim allowable expenses

Not every expense is tax-deductible, unless “wholly and exclusively” for business use. Claiming your allowable expenses can significantly lower your tax bill. These expenses cover:

Equipment:

- - Cameras, mics, laptops, editing software. You can claim full cost (cash basis) or via capital allowances (8-18% annual write-off).
  - Multi-use items like a phone? Apportion 70% business use.
  - Repairs and insurance.

Travel:

- - Only business trips (e.g., train to a brand event).
  - Hotels for shoots? Deductible, but keep itineraries. Do not disguise holidays as “content trip”.

Home office & subscriptions:

- Claim utilities (e.g., £312 flat rate for 25+ hours/week).
- Internet (£15/month business slice), Adobe Creative Cloud (£50/month).
- Non-gifted review products? deductible if used in content.

Action: Make a habit of regularly logging expenses digitally; HMRC Audits often demand receipts as proof.

Step 5: VAT – The silent creator killer

For side-hustlers with small earrings, VAT isn’t a headache. But if you are a high earner on TikTok, it can be one. Evading VAT is a legal offense.

Threshold: If your taxable turnover crosses £90,000, you must register for VAT within 30 days with the official authority. Applicable VAT charge is 20% on deals; however, you can reclaim input VAT on expenses.
Voluntary option: Even if you haven’t surpassed the threshold, registering early means you can reclaim VAT. Remember to keep an eye out for new mandates.
Gifts: Promotional gifts? You only declare value as income; the donor or brand handles VAT.

Action: Track your monthly turnover. For VAT concerns, you can consult a TikTok UK accountant to draft an effective VAT strategy.

The ultimate hack

Tax navigation for a sole trader vs. a limited company is complex. However, as a content creator on TikTok, working with a specialist accountant can unlock savings of 20-30%, all while protecting and growing your hard-earned success. You stay compliant and also focus on your next big idea, simultaneously. Even better, download HMRC’s creator toolkit at gov.UK and be tax-smart.