Are payments in kind taxable?

As an influencer, many brands will be keen to partner with you as you have a ready-made and trusting audience to promote their products and services to. Social media influencers are rising and with it more businesses are gifting items, holidays and services as a means of payment. 

Influencers can be rewarded with: 

• cash fees 
• discounted or free products and services 

Discounted and free items, non-cash payments or payments in kind, are a form of payment for work and if an individual is considered to be running a trade, the value of these earnings should be included as taxable income and tax may be payable on their income.  

Even where the gifts are unexpected, if they are from a brand that you’ve worked with before and you promote their brand and products it’s likely HMRC would deem the gift as being income. 

A trade can be identified by considering the badges of trade, which include: 

• the individual seeks to make profits 
• the number of transactions 

The value of the payments in kind is calculated as market value, i.e. the amount the item would sell for on the day you received them.  

If the item is given to the influencer before it’s available publicly the market price may therefore be increased.  

If an influencer is given something that can’t be converted into cash, for example a non-transferable holiday, it is not taxable income. 

It’s not always simple to determine if a gift should be included as taxable income, or how to value it. Accountants have experience of tax legislation and can use their expertise to ensure you report your income correctly to HMRC. 

How we can help 

If you would like to know more about how TaxAssist Accountants can help you with your business and require advice on payments in kind call our office on 0800 0523 555 or use our online contact form. 

Date published 30 Aug 2024

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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