So, we’ve broken down the seven most common TikTok tax myths and explained what you really need to know to stay on the right side of the rules.
“You can claim anything as a work expense if you just say it’s for work”
Not quite.
For an expense to count, it must be directly linked to the way you earn your income.
Everyday purchases don’t usually count just because you use them at work or say they’re work-related. If it doesn’t have a clear and genuine connection to your business income, work specific, and backed up by proper records, it won’t be classed as an expense.
Try and keep your personal and business spending as separate as possible; fines and other legal consequences can take place if you try and claim personal spending.
Head to our blog post on things you can and can’t claim as an allowable expense Allowable expenses for the self-employed – Whyfield
“Personal and lifestyle costs are deductible for entertainers and influencers”
Many influencers and entertainers think they can put things like clothes, beauty treatments, meals, or even holidays through as a business expense, just because they post about them online.
But HMRC take a different view, and there is a big difference between personal lifestyle choices and genuine business costs.
To qualify, expenses have to be exclusively for business. That means things like professional photoshoots, sponsored travel, or advertising spend are usually fine, but items like clothes you wear day to day normally won’t be allowed, even if they’re used in your content.
“You can deduct gambling losses”
Gambling is generally seen as a hobby, not a profession, meaning most people can’t deduct gambling losses. Claiming losses against income without being a registered professional gambler could lead to consequences.
“You don’t need to declare income from side gigs or freelancing”
Any extra income, through things like online sales, freelancing, or any other way you might make extra income, no matter how irregular or casual this may be, must be declared.
In fact, if you’re selling through online platforms, you need to make sure you keep within the £1,000 free limit, under the Trading Allowance.
Read more here: Trading Allowance for selling second-hand and handmade – Whyfield
“You don’t have to pay tax if you’re paid in cash”
Being paid in cash doesn’t mean tax-free money; it still counts as income and failing to report it is considered tax evasion.
That is why it is so important to always keep a record of your income. No matter what payment method is used, you still need to make sure this income is declared.
As an employee, you may be paid in cash, which is fine, but you should always receive a pay slip, and your employer still needs to take off the right amount of income tax and pass this on to HMRC.
“Forming a limited company means you can deduct personal expenses”
Setting up a business purely for tax deductions is classed as fraud, but some people think that starting a limited company is a way to be able to claim personal costs.
If your business has genuine income, clients, and activity, then you can claim deductions. But setting up a shell business to funnel personal expenses is illegal and could lead to an HMRC investigation.
“If your friend or family member does your tax return, you don’t need to worry about mistakes”
You are still legally responsible for everything that’s in it, if they make a mistake or change the numbers, the individual taxpayer is the one who HMRC will investigate.
Always:
Whether these are things you have heard on TikTok or seen somewhere else, it is important to be careful when it comes to tax advice, always make sure the information you follow comes from a source you can trust (like Whyfield! 😉)
We are always here to help, so if you’ve read or heard something you’re not sure is true, just give us a call and we will be able to check it and talk it through with you.
Contact us on 01872 267 267
You can also send a screenshot of the information via email or WhatsApp.
Email: contact@whyfield.co.uk
WhatsApp: 0777 49 39 111