London
GBP (£)
No
PayPal, Bank Transfer
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If the influencer is acting as an individual without any registered activity, it is essential to be aware of applicable rules and regulations, as you may have additional responsibilities towards the individual. It is important to understand what legal obligations apply to you. You may for example have withholding responsibilities or be required to pay social costs.
A person providing a service to someone without actually registering an activity. It could for example be someone helping the neighbour with their math exercises before a test for a small fee.
Yes, but conditions may apply. If the activity is not viewed as a hobby or if certain thresholds are met, the influencer should register their activity as a sole trader or company.
Receiving compensation as an individual can be tricky and may sometimes raise concerns related to employment laws and taxation rules. Therefore, it is quite common for influencers to register their activity as sole traders in their country of work. In fact, most countries have simplified systems allowing persons to register their activity in a quick and easy way. This allows influencers to invoice their clients and pay their taxes in a more streamlined way.
A sole trader is typically a self-employed person who owns and runs their own business as an individual. Sole traders usually benefit from a simplified system designed to make it easier to start a business.
In the UK, sole traders are self-employed and run their businesses as individuals. Sole traders can issue invoices and sell goods and services. They also pay their own taxes and social fees. To pay taxes, you must register for "Self Assessment" if you are required to submit a tax return and have not done so previously.
The HMRC has a good guide on the registration process for sole traders here:
Yes.
If the influencer is popular, it is not uncommon that they have a registered company and a whole team working with them (billing, project management, technical team, ...).
A company is typically a legal entity formed by a group of individuals to operate a business enterprise. It may be organized in various ways for tax and financial liability purposes depending on the corporate law of its jurisdiction.
Yes.
Notwithstanding the above, it may be possible to receive compensation for influencer work without registering as a sole trader or company. Many countries have rules allowing individuals to receive compensation if certain conditions are met. However, it can be tricky sometimes to know if the activity can be classified as a hobby or not, therefore, when in doubt, it is almost always preferred to register as a sole trader to ensure compliance with applicable laws and regulations.
In the UK, social media influencers are required to pay tax on their income just like any other individual. This includes income from sponsored posts, brand collaborations, and other forms of advertising on social media platforms. If an influencer’s income from social media activities is their only source of income, they’ll need to register as self-employed with HMRC. However, it is possible to receive money as an individual if you receive less than £1000 a year in additional income, outside of your regular employment. This means that if your side income produces less than £1000 a year, you do not need to report this to the HMRC since it is a “tax-free allowance”.
If the activity is constant or habitual, the individual should register their activity. If the influencer is planning to do influencer marketing regularly or is investing time and money in the activity, it may be wise to register as a sole trader as soon as possible.
To assess your responsibilities towards the influencer, it is necessary to define your relationship and follow a proper due diligence process catered to the status of the influencer and their country of activity. This may include requesting information about their name, TIN number, age, and more.
It may also be relevant to do some research about the influencer's followers to verify that their followers fit the kind of content or product you would like to advertise. This is especially important if the followers are young (e.g. it may not be appropriate to advertise alcohol to underage followers).
The most common payment method used to pay influencers in the UK is PayPal and bank transfers.
Sole traders in the UK can invoice in the UK and outside. A sole trader may issue an invoice without VAT if the client is in the UK (conditions apply). However, when issuing an invoice to a client located outside the UK, the reverse charge rules apply. You can read more general information regarding the reverse charge on our website here.
In the UK, you may outsource invoicing operations to a third party or the customer if certain circumstances are met. You may issue a self-billing invoice if the parties have agreed to use self-billing before issuing the invoice. The agreement should preferably be in writing and specify the terms applicable to the self-billing invoice.
As a general rule, gifts are considered to be a form of compensation, and influencers should therefore always report the value of gifts, free travel, and vouchers to their tax authorities. The taxable value is usually based on the commercial value of the gift, travel, or voucher.
It is not uncommon for companies to be legally required to report to tax agencies when they pay out compensation to an influencer. Influencer partnerships are quite different from regular partnerships, compensation may not only include monetary compensation but also gifts, vouchers, and travel. In some countries, all types of compensation sent for “payment” to the influencer should be reported. Therefore, it may be relevant to verify your reporting responsibilities on that matter.
Since BREXIT, the UK is no longer obliged to follow the EU directive. This includes the DAC7 directive. However, to ensure tax reporting obligations for digital platforms. The UK has adopted the OECD’s Model Reporting Rules for Digital Platforms, requiring digital platforms to report details of the sellers using their platforms, including the income generated by those sellers, to HMRC. The rules will also require platforms to provide annual reporting to sellers to help them comply with their tax obligations. Digital platforms are expected to start collecting this information from 1 January 2024, with the first reports due by 31 January 2025.
You can find more information about the rules in the UK on the HMRC here:
As mentioned above, it is not uncommon for companies to be legally required to report to tax agencies when they pay out compensation to an influencer. This obligation may also be applicable if you are working with an influencer from another country. Many countries sign bilateral agreements in which they agree to exchange income statements with each other. This allows tax agencies around the world to have a better overview of the compensation paid out to the people conducting business in their country and better control over who should pay taxes or not. The exchange of income statements is especially relevant when paying out compensation to individuals without a registered activity. It is therefore important to verify your reporting obligations in your country.
Before drafting an agreement with an influencer, it is important to consider if the person has a registered activity as an influencer or a company. If the influencer is acting as an individual without any registered activity, it is essential to be aware of applicable rules and regulations, as you may have additional responsibilities towards the individual. It is important to understand what legal obligations apply to you. It is important to be fully aware of all the responsibilities before drafting any agreement with an influencer as you may be able, depending on the applicable laws and regulations, to put some of the responsibilities onto the influencer if it is clearly stated in the agreement. It is also important to consider any potential liabilities arising from the agreement. As such, the responsibility of each party should be clearly described in the agreement and preferably regulate topics such as the payment of indirect and direct taxes, reporting to tax authorities, or even social costs.
In most countries, influencer marketing is already regulated by national laws such as consumer protection and marketing laws or specific guidelines.
Considering influencers can reach consumers globally, examining legal implications in various countries is important. Violating the rules can lead to penalties, fines, and legal fees.
It's important to note that there are topics that are usually more strongly regulated within influencer marketing. These commonly include:
Work on this is progressing quickly both on a national and a global level. It would therefore be wise to keep yourself updated on new laws and guidelines being issued on the topic.
To ensure that the rules regarding influencer marketing are followed, the Advertising Standards Authority (ASA) has published a guide called “The influencers guide to making clear ads are ads”. The guide includes best practices on how to ensure that advertising content posted by influencers is compliant with the law and rules in the UK. This guide may as well be useful for brands and agencies for to know how they should handle their influencer marketing collaborations with influencers.
On the ASA webpage, they set out what information you can find in the influencers guide, including:
To find out more, you can click here.
If you are looking to collaborate with independent workers, it is essential to treat them as such. Influencers working independently should be treated differently from employees. It is crucial to provide them with creative and personal freedom, allowing them, for example, to choose and determine their activities and working hours. To prevent a relationship that could be seen as an employment relationship, it is imperative to draft a clear agreement between the two parties. If the relationship is too close to an employment relationship, it may be viewed as false self-employment. This may come with legal implications for the brand. Without an unambiguous agreement, a clear distinction is not always easy; both influencers and those who use them are often unaware of how the relationship can be viewed by the authorities.
As a rule of thumb, the more instructions you give regarding the services to be performed and the more the person is bound to your organization, the more likely it is that an employment relationship exists. To ensure that your relationship with the influencer is as unambiguous as possible, it is important to make sure that the agreement that is established is fair and offers them the autonomy to choose their activities and working hours. Also, the relationship should be independent in facts not only on paper. This should allow for a successful collaboration. In the case of false self-employment, the brand or agency may be responsible for paying employer fees and social costs for the influencer.
An Agreement can take many forms and does not necessarily have to be in writing. However, it’s usually recommended to sign a written Agreement with the digital creator before they start to work on a project. We recommend having a legal professional review the agreement before it's signed, to ensure that it covers all the necessary legal aspects relevant to the relationship at hand. It may be relevant to define the following points in the agreement:
1. Define Compensation Structure and Amount
Begin by specifying the type and amount of compensation the influencer will receive for their services. This can be a flat fee, commission-based, or a combination of both. Be transparent about the compensation structure and ensure that the influencer understands whether they are considered an employee or an independent contractor, as this has tax implications.
2. Outline Payment Schedule and Currency
Establish a clear payment schedule that details whether the influencer will receive a one-time payment or multiple installments. Also, specify the currency in which payments will be made, and discuss potential fluctuations in exchange rates to avoid confusion or disagreements.
3. Specify Payment Terms for Content Creation and Sharing
One important consideration is whether payment should only be made upon delivery of the post or if there should be two separate fees, one for creating the content and another for sharing it upon approval by the Brand. Clearly state these terms in your agreement to ensure both parties understand when and how payments will be made for each aspect of the influencer's work. It can also be important to regulate how the content can be used again by the brand and how long the post should be up on social networks.
4. Detail Payment Methods and Third-Party Involvement
Outline the method of payment, whether it's PayPal, wire transfer, or through a third party. If you're using a third-party service provider, such as Gigapay, to handle payouts and reporting, include this information in the agreement. This helps set expectations and ensures the influencer knows who will send the payment and when to expect it.
Want to know more about influencer partnership agreements? Use this guide to ensure your agreements cover all essential aspects and foster long-lasting, mutually beneficial relationships with your influencers.
With Gigapay you can start working with creator in a breeze. Forget about complicated KYC process and a long chain of approval. Simply upload your spreadsheets with the emails of who you would like to pay and we handle everything for you. We tank care of collecting all the necessary legal information in order for you to pay influencers.
With Gigapay you can start working with creator in a breeze. Forget about complicated KYC process and a long chain of approval. Simply upload your spreadsheets with the emails of who you would like to pay and we handle everything for you. We tank care of collecting all the necessary legal information in order for you to pay influencers.
With Gigapay you can start working with creator in a breeze. Forget about complicated KYC process and a long chain of approval. Simply upload your spreadsheets with the emails of who you would like to pay and we handle everything for you. We tank care of collecting all the necessary legal information in order for you to pay influencers.
With Gigapay you can start working with creator in a breeze. Forget about complicated KYC process and a long chain of approval. Simply upload your spreadsheets with the emails of who you would like to pay and we handle everything for you. We tank care of collecting all the necessary legal information in order for you to pay influencers.
Note: The information provided on this website does not, and is not intended to, constitute legal advice. All information, content, and materials available on this site are for general informational purposes only.
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Explore our guides detailing the dos and don'ts of influencer regulations. Ensure your influencer partnerships comply with the latest international regulations.
