If you’re making money from streaming on Twitch or on YouTube, you might need to pay taxes on that income, regardless of whether it’s donations, ad revenue, or affiliate fees.
Taxable income for streamers
There’s a threshold, above which your revenue is taxable. It’s currently at £12,500 for the tax year, and it includes all your sources of income: wages, fees from freelance and gig work, ad or affiliate revenue, royalties, or all other income. If all of your income combined is more than £12,500, then you need to pay taxes on the money above that limit; the threshold is not for each revenue stream separately. If you’re streaming on a few platforms, the different sources count towards the same limit, and you should add the money you made from each service to the other incomes you had during the taxable year.
If you have a full-time job, your company has probably submitted the correct tax information for your wages to the HMRC. If you have any side revenue on top of that, or if you’re self-employed, you have to file a self assessment return.
How do I pay tax on streaming revenue?
To pay tax, you need to register as self-employed; if you’re doing this for the first time, you can put “online streaming professional” under the description of your business. You need to keep records of all of your income and work expenses in the tax year, in order to have all the info ready when you need to file your tax return. You also need to store all invoices and receipts for 5 years.
You can claim back expenses related to your professional activity as a streamer, for example a portion of your internet and electricity bill, computer parts, and so on. An accountant can help you accurately assess each type of expense.
If you receive money in foreign currency (US dollars or else), you need to use the exchange rate of the HMRC’s website to convert the amount to pounds.
Are donations from Twitch or Patreon taxable?
Yes, Twitch or Patreon donations are taxable, since they’re not actually donations in the strict sense (meaning, money used for charitable purposes). All personal income is taxable. If, on the other hand, you’re raising money for a charity via a stream you’re broadcasting, you simply need to pass on the money to the charity of your choice. If you fail to do so, this is considered fraud, so make sure to track everything accurately.
How much tax will I have to pay?
On income under £12,500, you don’t need to pay any tax—you simply file a tax return. On income between £12,501 and £50,000, the rate is 20% (for anything above the taxable limit, not for the total amount). Then, you have the second bracket at 40% for income between £50,001 and £150,000 and the next one, at 45%, for income above £150,000.
How can Fonoa help?
If you have registered a company or sole proprietorship to withdraw the income earned from streaming services, we can help you to comply with invoicing regulations in your country.
In most cases, to meet your accounting obligations, you need to issue an invoice for every amount of money you receive on your account.
Fonoa got you covered. Our Invoicing product will help you issue fully compliant VAT invoices, so you can focus on scaling your business and income.
Reach out to us, and we will help you automate your invoicing process.