Are you overpaying tax on your Google Adsense income?

From 1 June 2021, changes in US tax law meant that creators in the YouTube partner program that were receiving income in relation to the provision of their online content for example Google Adsense, would now be subject to US withholding tax.

Although this new rule means that income generated from US audiences can be subject to tax in the US, UK resident content creators can claim exemption from such withholding tax. If you (or your company) are UK resident and did not claim the exemption through your AdSense account before 1 June 2021, you may already be having tax withheld on AdSense income.

If you are suffering withholding tax, it is not too late to claim an exemption from future income. The team at Starbox may also be able to help you reclaim tax already deducted.

What is withholding tax?

Put simply, withholding tax is a method whereby taxes are deducted at source from your gross income. This is so that they can be paid over to the appropriate authorities to settle your tax liability as and when the income is received. A common example of withholding tax would be PAYE which is operated here in the UK. This is where employers deduct and withhold Income Tax from your gross pay before paying it over to HMRC.

What does this mean?

UK resident creators are entitled to receive AdSense income gross with no deductions of US withholding tax. Instead, the income is assessable and taxed in the UK. This is due to the double taxation treaty that exists between the UK & US, it provides an exemption to UK residents from paying US tax in these circumstances. If the exemption from US withholding tax has not been made in previous years, US withholding tax would have continued to have been deducted from your AdSense income.

Why Google?

Under US tax law Google is a withholding agent and is therefore required to comply with US tax law. Google is tasked with the responsibility of withholding taxes on relevant YouTube earnings, where appropriate.

Who has been affected?

Creators in the YouTube Partner Program (YPP) receiving income from viewers in the US from:

  • Ad views
  • YouTube Premium
  • Super Chat
  • Super Stickers
  • Channel Memberships

What action can I take to exempt future income?

If you are a UK resident creator, you will be able to claim the exemption by preparing and submitting the relevant W-8 BEN/E form which can be done through your AdSense account. The forms will provide Google with all the necessary information needed to ensure you do not suffer future US withholding tax.

Google have provided the following instructions to assist you in submitting the relevant form and claiming the withholding tax exemption:

  • Sign into your AdSense account.
  • Click Payments
  • Click Manage settings
  • Scroll to “Payments profile” and click edit next to “United States tax info”
  • Click Manage tax information
  • On this page you’ll find a guide that will help you to select the appropriate form for your tax situation

We strongly recommend that this is completed as soon as possible.

I have already suffered withholding tax, can I reclaim this?

Yes! UK residents that have paid US withholding tax on their AdSense income are eligible to make a claim to the IRS for these amounts to be repaid, the process to do so is complex. However the team at Starbox are here to help, so please get in touch with us on our contact form. Or speak with your normal contact in the team, and we will be delighted to assist further.