Brits urged to 'keep record' or face HMRC fine

Hundreds of thousands of Britons could be sleepwalking into a tax mistake that leaves them facing £100 fines from HMRC, all because of gifts and freebies they haven't declared. With the tax year now halfway through, experts are warning anyone with a side hustle, freelance income or even perks given in exchange for work that they may need to complete a self-assessment return by January 2026.

The warning comes as HMRC looks more closely at "non-traditional" income streams, with an estimated 400,000 so-called "micro-influencers" in the UK alone. But the issue extends well beyond social media. Free products, restaurant meals, experiences and even clothes given in return for promotion or work are increasingly being treated as taxable income.

Tax specialists explain that HMRC views gifts from companies as a form of payment if they are provided in return for services, whether that's posting on social media, writing a review, or any other promotional activity.

"If you're receiving products, experiences or services in exchange for promotion, HMRC sees that as taxable," says Mitch Hahn, CEO of specialist accountancy firm Nordens. "It's important to keep records of the value of what you've been given, as well as any cash payments, to make sure you're staying compliant."

Failure to declare such earnings can lead to automatic fines. Submitting a late tax return comes with an initial £100 penalty. After three months, daily fines of £10 can be added, up to £900.

Six months late, there's an additional 5% of the tax due or £300 charge (whichever is higher). After a year, another penalty of the same amount can be applied.

HMRC does draw a line between genuine gifts and taxable perks. A candle or small token worth less than £50, given without any expectation of promotion, is usually treated as a true gift and not income. But if there's an obligation attached, even a polite nudge to "share online", the taxman is likely to count it.

Experts recommend keeping careful records of all payments and gifts received in connection with any work or promotion. Simple spreadsheets or budgeting apps can help avoid nasty surprises come January.

Hahn adds: "It doesn't matter if influencing or freelancing is just a side hustle alongside a full-time job - HMRC looks at your total income. Keeping on top of what you've earned and the value of what you've been given is essential if you want to avoid fines."