Britain’s booming creator economy is fueling a rise in “side hustles” as millions of people turn content creation into extra income – but new research suggests many could face unexpected tax bills.
According to Tide, the UK’s leading business platform, the average social media earner now earns £1,223 a year – exceeding HMRC’s trading allowance of £1,000, which allows individuals to earn small amounts tax-free.
But more than half of social media users are unaware of the rule, putting them at risk of self-assessment fines which start at £100 and can escalate quickly.
Tide’s research found that 42% of adults in the UK have received either money or gifts in exchange for social media posts on platforms such as TikTok, Instagram, X (Twitter) and YouTube.
For some, this means small perks or free products. But for a growing number of creators – particularly younger users – it has become a significant source of income.
A fifth (21%) of working people now earn more than £1,000 a year from their content, while 55% of 18-24 year olds say they earn from social media – the highest of any age group. Despite this, only 36% of young creatives have filed a tax return with HMRC.
The problem, according to Heather Cobb, Tide’s UK managing director, is that many casual artists don’t realize that their side hustles count as taxable income:
“It’s great that TikTok and Instagram have opened up new ways for people to earn. But even if you get paid with free products, these items have value – and that value counts towards the £1,000 allowance. If you don’t follow it, you could face unexpected penalties.”
Under HMRC’s trading allowance, individuals can earn up to £1,000 of gross self-employment or side-hustle income each tax year before they have to declare it. Once income exceeds this amount – whether through cash payments or the value of gifted items – individuals must register for self-assessment and report their income.
Only 44% of those who make money from content creation say they have done so. With fines for late filing and “failure to notify” potentially running into thousands of pounds, Tide estimates that total fines across the UK could be in excess of £2 million annually.
Cobb encouraged founders to separate business income from personal finances early on: “Track your income from day one. Open a separate business account, keep receipts, and record the value of gifts. Tools like Tide Accounting can help easily manage taxes and expenses.”
For many, social media income is the first step towards entrepreneurship.
Megan Paul, a Tide member and founder of Gel by Megan in Warwickshire, said her business started as an Instagram hobby: “Posting photos of my nail art was initially a creative outlet but soon evolved into paid brand work and is now my own training academy.”
Taxes and self-assessments can be daunting, but local business communities and modern financial tools make it much easier. I would encourage anyone making money online to take it seriously – it could be the start of something bigger.”
The rise of the “TikTok tax” underscores how quickly passion projects can turn into taxable businesses. As the boundaries between personal and professional become blurred, the UK tax system and financial education must keep pace, experts say.
As millions of creators earn, donate and collaborate online, understanding basic governance and compliance has become essential – not only to avoid penalties, but also to build sustainable digital careers.
For the new generation of side hustlers, staying on top of taxes may not be a luxury—but it is the price of converting likes and views into legitimate income.
