Have you noticed that you are receiving less money than expected from your Google AdSense income? Changes in 2021 meant that Google have started withholding tax on AdSense income. This is unless changes to the tax information on channel holders accounts were updated to confirm UK tax status. If you missed the changes or did not enter the information in correctly, you may find that your channel is having tax as high as 24% being withheld from the income received from Google.
Luckily all is not lost, but you should act quickly to recover withheld amounts in the 2022 calendar year without incurring additional cost.
What is withholding tax?
Withholding tax is a method whereby taxes are deducted at source from your gross income. UK resident creators however, due to the double taxation treaty that exists, are entitled to receive AdSense income gross with no deductions of US withholding tax. The income is assessable and taxed only in the UK.
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
UK resident creators are able to claim an exemption by preparing and submitting the relevant relevant W-8 BEN/E form which can be done through your AdSense account.
What can I do?
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.
As the US tax year runs from 01 January to 31 December, it is important you check that you have correctly submitted the W-8 BEN/E form. If you have been subject to any US withholding tax for the 2022 US tax, but correctly complete the form, Google should be able to issue you a refund for amounts withheld in 2022. However, you must do this by 31 December 2022 to get the automatic refund from Google.
If you do not complete this form before the end of the US tax year, and are subject to US withholding tax, the amount can be reclaimed, but will involve a complex and lengthy process of filing a return with the IRS. It is much more time and cost efficient for you to simply check that you have made the correct declarations! Amounts withheld in the 2021 calendar year can now only be reclaimed by this lengthier process.
As always, 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.