Your Guide to OnlyFans VAT in the UK
OnlyFans launched in 2016 and is an online subscription service where creators can earn money from 'fans' paying to view content.
If you are an OnlyFans creator and earn above £12,570 during the year, like any self-made income, you will need to pay tax on this. Likewise, if OnlyFans is your side hustle, you will also need to pay tax on this unless you are just starting.
In our dedicated guide here, you can read all about how much tax you might need to pay as an OnlyFans creator.
What is Value Added Tax (VAT)?
VAT stands for Value Added Tax and is a consumption tax placed on nearly all goods and services sold. The idea behind VAT is that consumers pay a tax on products they buy based on the product's value. VAT rates are percentage based, which means the higher the price, the more the consumer pays. The standard rate in the UK is 20%.
When do I need to register for VAT as an OnlyFans Creator?
You are only required to register for VAT if:
- Your self-employed earnings (including OnlyFans) for the last 12 months was over £85,000 (the VAT threshold)
- You expect your earnings to go over £85,000 in the next 30 days
You must also register (regardless of the above) if all of the following are true:
- You are based outside the UK
- Your business is based outside the UK
- You supply any goods or services to the UK (or expect to in the next 30 days)
You can register for VAT even if the points above don't apply. The key benefit of becoming VAT registered is that you can claim back the VAT you pay on things you buy for your business, and this means you can save up to 20% on anything you use for your business, like cameras and props.
Whilst this can save you some money, it also means that you will need to pay 20% of all your sales to HMRC.
How does OnlyFans manage VAT?
Any VAT collected by OnlyFans is paid to HMRC in full. OnlyFans recently introduced this process to protect the 80/20 earning split between Creators and OnlyFans. Regardless the Creator or Fan is based, the 80/20 earning split is protected.
The VAT payment to HMRC depends on whether you are registered for VAT, as explained below.
If you aren’t registered:
If you aren’t registered for VAT, meaning that you don’t earn more than £85,000 a year and you haven’t voluntarily registered, you don’t need to do anything as OnlyFans will directly collect VAT on your sales.
In fact, from the 1st of July 2020, OnlyFans has been identified as the one liable for collecting VAT for non-registered creators. Before this date, the platform only paid VAT on its cut (20%) from creators’ sales.
Note that due to this, your fans will be charged a higher subscription fee (your set price + VAT charged by OnlyFans).
To help you solve any doubt, here’s an example of how VAT works if you aren’t registered:
If you decide to charge £10 for your subscription, OnlyFans will automatically apply VAT, set at 20%, on your price. This means that your fans will pay £12 for your subscription (your price + £2 of VAT).
After this, OnlyFans pays you your cut, which is still 80% of your set price (£8), whereas it retains its cut (20% of your set price = £2) and the VAT (£2), which will be then sent to HMRC directly.
If you’re registered:
If you’re registered for VAT, the process is a bit more complicated to understand.
In this case, both you and OnlyFans are liable for VAT payments to HRMC for different amounts. However, the platform will collect the whole VAT amount paid by your fans, and subsequently pay your VAT share to you monthly on a separate payment from your regular earnings. You’ll be then required to personally send this amount to HMRC.
Read our blog post about VAT if you need to register
Here’s an example of how VAT works if you are registered:
If you decide to charge £10 for your subscription, OnlyFans will automatically apply VAT, set at 20%, on your price. This means that your fans will pay £12 for your subscription (your price + £2 of VAT).
After this, OnlyFans pays you your cut, which is still 80% of your set price (£8), and your share of VAT, which equals 20% of your earnings (20% of £8 = £1.60), that you’ll need to send to HMRC. On the other hand, OnlyFans retains its cut (20% of your set price = £2) and its share of VAT, which equals 20% of its earnings (20% of £2 = £0.40), which will be then sent to HMRC directly.
But, let us walk you through this process one step at a time.
First of all, if you’re registered, OnlyFans requires you to provide them with your valid VAT number in the “Bank” section at https://onlyfans.com/my/banking/ and confirm acceptance of the self-billing agreement.
After this, the platform will carry out some security checks before sending any VAT payments to you. In order to receive it, you’ll need to email proof of your VAT filing to [email protected]. This is to make sure that the VAT on your OnlyFans earnings has been declared to HMRC. Once these checks have been carried out, you’re all set and can request VAT payments to the platform.
To create VAT invoices, you’ll need to go to https://onlyfans.com/my/banking/vat/create-document in the VAT documents section under “Statements”. Once you created all the necessary invoices, you’ll only need to send them through the “Add Documents” button.
Remember that OnlyFans will pay you your earnings (80% of fans’ payments) and the VAT in two separate payments to facilitate you sending the correct amount to HMRC.
The platform will also provide you with a VAT statement, explaining the amount, which you can use to complete your VAT return and send the right amount to HMRC.
How can Earnr help?
If you're not quite ready to do all this yourself, tools like Earnr can help you with staying on top of your tax responsibilities for your business. While we don't help with VAT returns quite yet, we still help you understand when you should consider registering for VAT. If you would like further advice or guidance, you can book in a 1-1 call with one of our specialists on Earnr Pro.
Learn more and download Earnr here.
-Thumbnail.webp)
