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Are Twitch donations taxable? (UK) 

  • 4 min read
  • Last updated 14 Jul 2023

When it comes to taxes, the term donation understandably causes confusion. 🤯

As donations are generally viewed as gifts, we naturally don’t feel responsible for receiving them. 

But, the terms donation and tax-free are interchangeable, right? 

Unfortunately not. 

The tax you pay reflects how much you earn, not how you earn it, and HMRC will want to know exactly how much that is!

Fortunately, we’ve got your back when it comes to navigating taxes for this growing streaming service.  🙌

What is Twitch?

If you’re reading this guide, then you’re probably already familiar with Twitch

But, there may also be a few of you who are upcoming musicians, avid gamers, or sports lovers wanting to find out more about the platform. 🎮

So, for those of you who don’t know, Twitch is a live video streaming service.

A few things you should know about Twitch:

  • It was founded in the United States in 2011
  • It was bought by Amazon in 2014
  • There were an estimated 1.5 million users in the US in 2020, which is expected to rise to 51.6 million by 2024. Wow, that’s a lot! 📈

But you’re not here for a history lesson. We get it. Where taxes are concerned, you want to know your stuff! 🧑‍🏫

What are Twitch Donations? 

Once you’ve built up a Twitch fan base, the term ‘Twitch Bits’ might enter your vocabulary. 

Twitch Bits (donations) are a digital currency which can be bought to support streamers, gain recognition, get attention in chats, and more. 🫰

How do I earn Twitch donations? 

Technically, anyone can earn Twitch Bits. But, to gain access you must meet a set of requirements. 

There are two ways you can use the streaming platform: 

  • Affiliate account – an affiliate account is the first step in monetizing your channel. 
  • Partner account – the partner account allows you to level up from your affiliate account. You might be turning your side hustle into a full-time job. Yes. Twitch has the opportunity for career progression. 🤩

So, what do I have to do?

To become an affiliate, you must do all of the following within a 30-day period:

  • Have 50 followers
  • Stream for 8 hours across 7 different days
  • Have an average of three viewers

Already bossing your affiliate account? Then see if you meet the requirements to become a partner.

In a single 30-day span, you must:

  • Stream for 25 hours
  • Be online on 12 different days
  • Have an average of 75 viewers

If you meet the requirements for either of these programs then expect Twitch to slide into your DM’s. 

Are Twitch donations taxable?

Just as you thought you were about to become Alan Sugar, HMRC entered the chat. And, now you’re wondering – are Twitch donations taxable? 

If there’s a will, there’s a way, and like most forms of income, HMRC will want you to declare your donations once their total exceeds £1,000. 

Do I need to file a tax return? 

If you’re lucky enough to earn over £1,000 from Twitch you’ll need to inform HMRC and file a self-assessment tax return. 🗒️

Here’s the good news. In the UK, everyone has a personal allowance, meaning they can earn up to £12,570 in a single tax year, without having to pay any income tax

But, don’t get confused. 

If your Twitch channel is a hobby or side hustle, then it is likely that you’re receiving another form of income. 💰

Let’s say that you’re earning £10,000 in Twitch donations and £20,000 from another form of employment in a single tax year, you will earn a combined income of £30,000. Because this income exceeds your personal allowance (£12,570) you’ll have to pay some tax. 

If you’re unsure about exactly how much you’ll pay then you can use our income tax calculator: 

Your situation

Outlined number oneOutlined number one
I am
Annual self-employed income
Self-employed expenses
?

Tax and profit

Outlined number two
  • Total earnings
    £50,000
    £1,000 tax-free Trading Allowance
    ?
  • Tax to pay
    £10,994
    £7,286 income tax
    £159 class 2 National Insurance
    £3,549 class 4 National Insurance
  • What you’re left with
    £39,006

How your income tax is calculated

When you’re self-employed, you have to pay your income tax and national insurance contributions yourself in your annual Self Assessment. Our calculator helps you quickly assess how much you owe.

However you may be eligible for a tax refund when:

  1. You already made tax payments for the year but your annual income ended up less than planned
  2. You have done things that qualify for a tax relief (made private pension contributions, given to charity, etc.)

In your case when you earn £50,000:

Income tax breakdown

You pay no income tax on first £12,570 that you make

You pay £7,286 at basic income tax rate (20%) on the next £36,430

National insurance contributions breakdown

No contributions on the first £9,568 that you make

You pay £3,549 in contributions (at 9%) on the next £39,432 that you make

You pay £159 in NI Class 2 contributions

So, how much tax will I have to pay?

HMRC will combine your Twitch donations with any other income you have received during the same tax year. This could be from full-time employment or other side hustles.  

How much Income tax you’ll pay depends on your tax band, but here’s a quick summary: 

Taxable income Tax rate 
Personal Allowance Up to £12,5700%
Basic rate £12,571 to £50,27020%
Higher rate £50,271 to £125,14040%
Additional rate Over £125,14045%

If you’re looking for more information on the basics of Esports tax, then you can view our guide here

If you pay close attention to our guide linked above, you can find expense suggestions that you can claim back to reduce your overall taxable income! As we said, we’ve got your back! 💻

What about National Insurance? 

National Insurance (NI) is a tax contribution paid to HMRC by employees, their employers, and the self-employed. This entitles people to certain provided benefits such as the State Pension and the Maternity Allowance. 🤱

Do I have to pay National Insurance?

You’ll have to pay National Insurance if you’re 16 or over and are either:

  • Employed and earning over £242 a week
  • Self-employed and making a profit of £12,570 a year

You do not pay National Insurance but still qualify for certain benefits and the State Pension, if you’re either:

  • An employee earning between £123 and £242 a week
  • Self-employed and your profits are between £6,725 and £12,570 a year

If you’re self-employed you stop paying Class 2 National Insurance (self-employed people earning profits of £12,570 or more a year), when you reach State Pension age. ✅ 

Time to start hustlin’

Now you know the tax basics, there’s no reason why Twitch can’t be your side hustle today and full-time job tomorrow! 💪 And don’t forget – if you need a helping hand with your taxes, we’re always here to help.

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