Selling branded merchandise can be a great way for influencers and content creators to earn additional income. Whether you sell T-shirts, hoodies, mugs, phone cases or other products, your merchandise sales can create tax and record-keeping responsibilities.

Understanding Influencer Tax UK rules can help you manage merchandise income correctly and avoid problems with HMRC.

Is Merchandise Income Taxable?

If you regularly create or buy products to sell for profit, HMRC is likely to treat this as trading activity. Your merchandise income should generally be included when working out your taxable trading income.

HMRC states that if you buy or make goods intending to sell them for a profit, you are likely to be trading. Income from merchandise sales may also need to be considered alongside other trading income, such as sponsorships, advertising and content creation.

For example, if you sell £8,000 of merchandise during the tax year and also earn £25,000 from brand deals and online content, these income sources may need to be considered together for your tax position.

What About the £1,000 Trading Allowance?

The UK trading allowance is £1,000 for a tax year. If your total trading income is more than £1,000, you may need to tell HMRC about your income and work out your taxable profit.

Importantly, the £1,000 threshold applies to your total trading income, not simply your merchandise sales. This means merchandise, sponsorships and other trading income may all need to be considered together.

Do Influencers Need to Pay VAT on Merchandise?

VAT is separate from Income Tax.

If your taxable turnover goes over £90,000, you normally need to register for VAT. The threshold is based on taxable turnover rather than profit.

For influencers selling merchandise, this means you should monitor your overall taxable sales carefully. Your merchandise business may also need to consider VAT if you sell through an online store or marketplace.

You can also voluntarily register for VAT below the £90,000 threshold, depending on your circumstances.

Which Merchandise Costs Can You Deduct?

When working out taxable profit, genuine business costs can usually be taken into account.

Examples may include:

Merchandise stock and materials
Packaging
Postage and delivery costs
Website and ecommerce costs
Payment processing fees
Advertising and marketing
Business insurance
Professional accounting fees

HMRC lists stock and raw materials, advertising, website costs and certain other business expenses among costs that may be allowable for self-employed businesses.

Keep invoices and receipts for these costs so you can support your figures if HMRC asks for evidence.

Keep Merchandise and Influencer Income Records Separate

If you earn money from multiple sources, good bookkeeping becomes particularly important.

Keep records of:

Merchandise sales
Sponsorship income
Platform income
Product costs
Shipping and packaging
Advertising costs
Platform and payment fees
Refunds and returns
VAT charged, if registered

A separate business bank account and organised bookkeeping system can make it much easier to track your actual profit.

What If You Sell Merchandise Through a Platform?

Many influencers use ecommerce websites, marketplaces or print-on-demand services to sell merchandise.

Digital platforms may collect information about sellers and, in some circumstances, report information to HMRC. However, platform reporting does not automatically mean that you owe tax. You are still responsible for understanding your own tax position and keeping appropriate records.

How Influencers.Accountants Can Help

Merchandise can add another layer to an influencer's finances, particularly when combined with sponsorships, affiliate income and platform earnings.

Influencers.Accountants can help creators organise their income and expenses, understand their tax responsibilities, monitor VAT thresholds and keep their bookkeeping in order.

Final Thoughts

Merchandise sales can become an important income stream for influencers, but they should be treated as part of your wider business finances. Track sales, keep evidence of costs and monitor your total trading and taxable turnover.

For official guidance, see HMRC guidance on selling goods and online platform income.