Britain’s booming creator economy is fuelling a surge in “side hustles”, with millions of people turning content creation into extra income — but new research suggests many could face unexpected tax bills.
According to Tide, the UK’s leading business management platform, the average social media earner now makes £1,223 a year — exceeding the HMRC £1,000 trading allowance that lets individuals earn small sums tax-free.
Yet more than half of social media users remain unaware of the rule, putting them at risk of self-assessment penalties that start at £100 and can quickly escalate.
Tide’s study found that 42% of UK adults 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 evolved into a significant revenue stream.
A fifth (21%) of earners now make more than £1,000 a year from their content, while 55% of 18–24-year-olds report earning from social media — the highest of any age group. Despite this, only 36% of young creators have filed a tax return with HMRC.
The problem, says Tide’s UK Managing Director, Heather Cobb, is that many casual creators don’t realise their side hustles count as taxable income:
“It’s great that TikTok and Instagram have opened new ways for people to earn. But even if you’re paid in free products, those items have a value — and that value counts towards the £1,000 allowance. If you don’t track it, you could face unexpected penalties.”
Under HMRC’s trading allowance, individuals can earn up to £1,000 in gross income from self-employment or side hustles each tax year before needing to declare it. Once earnings exceed that 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 earn from content creation say they have done so. With late filing fines and “failure to notify” penalties potentially running into thousands of pounds, Tide estimates that total fines across the UK could exceed £2 million annually.
Cobb urged creators to separate business income from personal finances early on: “Track your earnings from day one. Open a separate business account, keep receipts, and record the value of gifts. Tools like Tide Accounting can help manage tax and expenses easily.”
For many, social media income has become the first step towards entrepreneurship.
Megan Paul, a Tide member and founder of Gel by Megan in Warwickshire, said her business began as an Instagram hobby: “Posting photos of my nail art started as a creative outlet, but it soon grew into paid brand work and now my own training academy.
Taxes and self-assessments can feel daunting, but local business communities and modern finance tools make it much easier. I’d encourage anyone earning 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 evolve into taxable businesses. As the boundaries between personal and professional blur, experts say the UK’s tax system and financial education must keep pace.
With millions of creators earning, gifting, and collaborating online, understanding basic business management and compliance has become essential — not just to avoid penalties, but to build sustainable digital careers.
For the new generation of side hustlers, keeping on top of tax may not be glamorous — but it’s the price of turning likes and views into legitimate income.
Read more:
The TikTok tax: Millions risk HMRC fines as side hustlers surge past £1,000 earnings threshold
