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Twitch Tax Guide

Here is all you need to know about tax as a Twitch streamer

Twitch is a live streaming service previously owned by YouTube and now by Amazon. It’s mainly focused on video game live streaming, however it also offers music broadcasts, creative content, and in real-life streams.

Launched in 2011 by Justin Kan and Emmet Shear as a spin-off of the streaming platform Justin.tv, which was already known for its gaming category, Twitch has grown exponentially, counting 140 million monthly active users to date.

The platform offers live-stream of esports tournaments, personal streams of individual players, and gaming-related take shows. In 2015, Twitch introduced an official music category to stream radio shows and music production activities, and a “creative” one to include streams showcasing artistic works. In 2017, the platform included also an “IRL” category which comprehends every content that does not fall in any other established category, for example lifelogs.

In the latest years, Twitch became another way to monetise your passions, such as gaming, but as with any other platform of this kind questions about streamers’ finance and tax are easily forgotten. This guide is here to shed light on these questions.

How to become a Twitch streamer

First of all, Twitch streamers are people who broadcast their activities by sharing their screens with viewers who can hear and watch them live.

The process of signing up for Twitch is simple. You can either register on their website or on the Twitch app, once downloaded.

Once you've reached the sign-up form, you'll firstly need to choose your username, which must be between 4-25 characters in length and must not include any hateful, abusive, or threatening terms, otherwise, your account will be immediately suspended. Then you’ll need to set your password and provide your email address and date of birth. When signing up on your mobile, you’ll be also asked to provide a phone number.

Make sure to write your email and phone number correctly and to include your country code for the phone number, as you’ll receive a verification code via SMS or email to complete your registration.

Note that Twitch allows you to create more than one account. Currently, there’s no limit on the number of accounts that you can have.

We’ve also put together some tips for starting your channel: 

  • Get a good microphone and webcam: to increase the quality of your streams so viewers will be more likely to stick around.

  • Specialise in a game: this way, you can start building your follower base around a single game. Then later on you can  become a variety streamer, but it isn’t a smart move if you’re just starting.

  • Promotion is key. Promote your stream everywhere you can. Use your other socials, friends, family, etc

  • Collaborate with other streamers.

  • Build a relationship with your followers: you can communicate with them in real-time, get to know them!

  • Decide a schedule and stick to it: deciding how often you’re going to play/post and let your followers know

How much can I make as a Twitch streamer?

On average, a top Twitch streamer can make roughly $5,000 (£ 4,322) per month, usually playing around 40 hours a week, not including ad revenue. However, top Twitch streamers can make much more depending on the number of viewers.

There’re many ways to earn money on Twitch. But, it mainly depends on how many viewers consistently watch your live streams, and more importantly, how many of them subscribe to your channel.

Note that on Twitch subscribers and followers aren't the same thing. A follower on Twitch is pretty much like a follower on Instagram, so they can watch your stream when you’re live for free. On the other hand, a subscriber is a person who decides to support your channel through monthly donations (subscription fees).

Twitch offers three types of subscriptions (which can be paid monthly or in bulk payments at three or six-month intervals):

  • Tier 1: $4.99 (£4.30)

  • Tier 2: $9.99 (£8.64)

  • Tier 3: $24.99 (£21.60)

Based on the Tier selected, your subscriber should receive different tangible benefits, such as:

  • Emotes: these are specially designed emoticons (or emojis) that are unique to individual Twitch channels and are only available for subscribers of that channel.

  • Badges: these are special icons displayed alongside a subscriber's name. Streamers can customize them for their subscriber, even deciding to change them based on the length of a subscription.

  • Special alerts: this will allow your subscribers to announce their new or renewed subscription along with their Twitch username and the number of months they've been subscribed for, during a live stream.

  • Exclusive chatroom: only accessible to paying subscribers. It's up to the streamer to create them.

  • Exclusive competitions

  • Ad-free viewing

It’s important for you to know that to be able to get subscribers you need to be either a Twitch Affiliate or a Twitch Partner.

To become a Twitch affiliate, you’ll need to have streamed a minimum of 8 hours on 7 different days over the last 30 days, have at least 50 followers, and an average of 3 viewers per transmission.

Once you’ve become an affiliate you can earn money through subscriptions, bit sales, and promotions.

To become a Twitch partner, you’ll need to have streamed a minimum of 25 hours in the last 30 days, the live streams must be on at least 12 different days and have an average of 75 viewers per stream.

If you meet these requirements you can submit a partner application. In fact, meeting the requirements does not guarantee you to become a partner. If you manage to enter the program, you’ll be able to earn revenue through advertisements, channel customization, and exclusive access to special promotions.

Once you manage to become at least a Twitch affiliate, your monthly earnings will change based on the number of subscribed viewers. To give you an idea, we’ve reported an analysis by Streamer Facts, which reports the average earnings of Twitch streamers based on the number of viewers.

  • 5-10 viewers per stream = $50-$200 (£43.2-£173) per month

  • 50 viewers per stream = $500-$750 (£173-£648) per month

  • 100 viewers per stream = $1,000-$1,500 (£864-£1,296) per month

  • 1,000 viewers per stream = $5,000 (£4,322) per month

  • 5,000 viewers per stream = $13,000 (£11,239) per month

  • 10,000 average viewers per stream = $30,000 (£25,936) per month

Note that Twitch takes 50% of what you earn with subscriptions.

Whereas subscriptions are the main source of money for a Twitch streamer, there’re other ways in which you can earn on the platform.

Specifically:

  • Bits: it’s a currency used within the platform that users can use to get and send emoticons, animated emoticons, and custom emoticons. For each emoticon sent, the creator of the emoticon receives £0.01.

  • Become an Amazon affiliate: being an Amazon platform, you’ll be rewarded for recommending Amazon products. You don't have to meet any criteria to become one, you just need to talk about the product on your live stream and provide the corresponding link.

  • Include ads in your streaming: the money you earn through this method will again depend on how many viewers see the advertisement.

  • Note that it consists of a short pause in the broadcast, so we advise you to consider its length and frequency.

  • Get sponsorship from brands

You can gain access to some of these or all of them only by becoming a Twitch Affiliate or a Twitch Partner.

Do I need to pay tax? And how do I pay tax?

This all depends on how much money you make with Twitch (and outside Twitch).

If you earned less than £1,000 a year with Twitch you do not need to do anything. HMRC lets you earn £1,000 a year through platforms like Twitch without worrying about income tax.

If you earned more than £1,000 a year with Twitch, you need to submit a tax return. This doesn't always mean you need to pay tax. It just means HMRC wants to know a little bit more about your situation in case you start earning more in the future.

As with any self-made income you’ll need to pay tax on your income if you make over £12,570 in the tax year.

If you’re doing Twitch on the side then you’ll need to understand paying tax as a side hustle.

If you’re going full-time streamer mode then you’ll need to understand paying tax as self-employed.

As you start out you’re more likely to be a sole trader in which case the bands for tax are:

  • Tax allowance: 0% of earnings (You’ve earned between £0 and £12,570)

  • Basic rate: 20% of earnings (You’ve earned between £12,571 and £50,270)

  • Higher rate: 40% of earnings (You’ve earned between £50,271 and £150,000)

  • Additional rate: 45% of earnings over £150,000

It's important to remember you'll also need to pay National Insurance on your income if it's over £11,908 a year.

If you start hitting that higher rate of tax then it’s worth setting up as a limited company. This means you’ll pay corporation tax on your earnings at 19% rather than 40%+ income tax. If you’re on the basic rate it’s worth remaining as a sole trader and avoiding the additional admin and costs of setting up a limited business.

Each year you need to fill out a self-assessment tax return. What you pay is your freelance tax bill minus the expenses of running your business. We can help with this, submit a contact form here and find out more about the services we provide. 

The usual cut off date to complete your self-assessment is the 31st of January of the year after your year end (e.g. If your year end is like most 5th April (2023) then the due date for your tax return to be filed is 31st January 2024) if you’re doing it online, and 31st of October if you’re completing the form by post.

What can I expense as a Twitch streamer?

As a sole trader, you’ll have various running costs depending on the work you do. The costs can be deducted from your taxable profit as long as they’re eligible expenses.

So if you earn £50,000 and you claim £9,000 in expenses, you’d only be taxed on £41,000 for the year.

Note that if you use the £1,000 tax-free trading allowance you won’t be able to claim expenses.

You can read more on what the Government considers expenses here.

For a content creator you might expense things like:

  • A laptop

  • Microphones and webcams

  • Lighting

  • Transport and fuel if travel is involved

  • If you’re WFH then some of your rent, phone bill, broadband, energy bills

Be aware that if you use the same vehicle for traveling for work and for your own personal use then you’ll need to factor this in when any expenses are claimed. If you work out that you use your vehicle 40% of the time for personal use, then you would need to reduce any relevant vehicle running expenses by 40%. The same happens if you use your home as an office base, you should calculate which portion of your bills or phone usage can be counted as running expenses.

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