If you are an OnlyFans content creator, chances are that the intricate world of taxes gives you some sleepless nights. We understand that the entire landscape can be complex, especially Value Added Tax (VAT). 

You may be an established content creator or just starting out, but you need to have a thorough understanding of how Onlyfans VAT returns work, as this can affect your earnings. You might be required to register for VAT in the UK. 

Follow this guide as it covers the essential topics and sub-topics related to VAT for content creators of Onlyfans so that you are aware of compliance-related issues.

What is VAT for Onlyfans Content Creators?

VAT is generally defined as a consumption tax levied on goods and services based on their value at every stage of manufacturing or distribution. Consumers pay the tax when they purchase a product or a service. 

In the case of content creation, the fans pay VAT on the subscription fees so they can access your content. 

As per the HMRC, the VAT threshold for Onlyfans creators is £90,000. According to OnlyFans, creators should only count the 80% they receive as part of their VAT-taxable turnover. Creators need to track this amount over any 12-month period and must register for VAT if their earnings exceed this threshold or if they anticipate exceeding it within the next 30 days.

You can either speak to an expert accountant or access the UK government’s site to understand this better.

How does VAT Work for Non-VAT Registered Onlyfans Creators?

HMRC has ruled that Onlyfans must pay VAT on behalf of non-VAT-registered content creators. 

Additionally, Onlyfans content creators who have breached the terms must take additional steps while filing VAT and sending the same to HMRC.

For non-registered Onlyfans creators, Onlyfans must charge VAT on the subscription price and pay HMRC the same. 

For example, if the subscription fee set by the content creator is £10, Onlyfans charges the subscriber a fee of £12. Of this, 80%, or £8, goes to the creator, £2, or 20%, is retained by Onlyfans, and VAT paid to HMRC will be £2. 

How does VAT work for VAT Registered Onlyfans creators?

Once Onlyfans register for VAT, the tax computation can be complex and may require your to take a professional Onlyfans accountant’s help. 

Things to do after VAT registration are –

• Inform Onlyfans that you have registered for VAT. Provide Onlyfans with your valid VAT registration number.
• You should also begin filing your VAT returns. Filing is essential so that you can recover VAT for the business costs. It also means that you need to pay HMRC VAT on your sales.

In general services, VAT is charged from customers and then paid to HMRC after deducting the reclaimed amount. 

In the case of Onlyfans content creators, VAT is charged by Onlyfans and retained by the platform. The content creators do not retain the VAT. Therefore, content creators need to provide Onlyfans with a VAT-only invoice so that they can reclaim funds and not pay out of their own pocket.

A copy of the VAT return has to be filed with Onlyfans. 

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Let’s consider the same example mentioned above but from a VAT-registered creator point of view. Suppose your subscription fee is £10. The platform charges £12 from subscribers, then 80% or £2 is paid to the creator, and the platform retains 20% or £2. 

The VAT the creator has to pay HMRC is £1.60 (this applies to the content creator’s earnings). The VAT that Onlyfans have to pay HMRC is £0.40 (applicable VAT on their £2 fees).

The amount collected is the same when you compare the VAT collections from a registered creator and a non-registered creator. However, the mechanism of collections is different.  

It is also important to mention that the £1.60 per subscriber fee that the content creator owes to HMRC is usually not in their account for payment purposes, which can block their funds. 

Creating a VAT-only invoice for Onlyfans

Onlyfans has a self-billing system. Creators can access pre-set VAT-only invoices from their accounts on the platform. The invoices are created based on the creators’ 80% earnings. 

However, ensure that your accounts are in order to file your VAT returns on time and accurately. 

You are required to send the VAT returns to HMRC when Onlyfans’ VAT money arrives in your account. Once the money related to a particular invoice is received, the amount due is changed to £0. You then send the money to HMRC during the next VAT return cycle to make your VAT outstanding zero.

Meanwhile, once you start reporting Onlyfans VAT returns to HMRC, you are eligible to recover VAT on your business expenses. The exact value will be determined by your specific industry. You can include expenses on recording equipment, microphones, attire and clothing, software subscriptions, and accounting fees.

In case of any confusion about what you need to file VAT returns on and what you can claim, you should speak to a professional Onlyfans accountant like Cangaf Ltd.

Conclusion

The entire VAT landscape for content creators of Onlyfans can be quite complex. We have covered most aspects of VAT for both unregistered and registered creators. 

We recommend that you speak with our expert accountants to navigate the landscape more deeply. This will make it easier for you to report and file your Onlyfans VAT returns.