More and more people in the UK are opening OnlyFans accounts without realising that the income is taxable – and that could cost them dearly.
OnlyFans, and other similar sites like ManyVids and JustFor.Fans, allow content creators, public figures and influencers to get their content out to a wider audience and make money from it. However, do not be foolish enough to think it is money for nothing, it is like any other business – subject to tax and VAT.
Our article below lays out what you need to do, and when you need to do it by to ensure that you stay on the right side of HMRC and the law.
Personal Income Tax
The income made from OnlyFans is subject to income tax (and maybe national insurance) if you are not working through a company, and content creators should be filing personal income tax returns with HMRC for the profit they make from the site – to not do so is tax evasion and is illegal.
HMRC are now starting to crack down on the income from these types of sites – so get yourself in order before they come after you. HMRC will be far more lenient on you if you inform them of the situation rather than them catching you out later.
What do I need to file and by when?
The UK personal tax year runs from 6th April one year and ends 5th April the following year, with the deadline for filing and payment being 31st January the year after. So recent years are as follows:
- 2019/20: 6th April 2019 to 5th April 2020, due for filing and payment by 31st January 2021 – extended to 28 February during COVID-19
- 2020/21: 6th April 2020 to 5th April 2021, due for filing and payment by 31st January 2022 – extended to 28 February during COVID-19
- 2021/22: 6th April 2021 to 5th April 2022, due for filing and payment by 31st January 2023
- 2022/23: 6th April 2022 to 5th April 2023, due for filing and payment by 31st January 2024
- 2023/24: 6th April 2023 to 5th April 2024, due for filing and payment by 31st January 2025
- 2024/25: 6th April 2024 to 5th April 2025, due for filing and payment by 31st January 2026
You may need to file a personal tax return for each and every year that you made income from a content site. You can deduct any allowable expenses from your content income to come up with a content profit, and you will be subject to tax on that figure.
How much tax will I need to pay?
The amount of tax you will need to pay on your content profit will depend on how much you have made, as well as what other earnings you have from other sources.
Everybody has an annual personal tax allowance – the amount you can earn before you start paying tax – but anything above that is subject to income tax. We have had people say to us that they thought the could earn £10k through content creation before it is taxable and that is totally incorrect.
Your content earnings will be added to your other income – wages, dividends, interest, rental, etc – to come up with total earnings figure, which may be subject to tax at 20%, 40% or 45%.
What should I do if I need to file?
You need to notify HMRC immediately that you need to file a personal tax return, starting in whatever tax year you opened your content account. They will issue you with a Unique Tax Reference (UTR) number which you need in order to file your returns. The sooner you notify them you need to file, the more lenient they will be with you on penalties should you have missed any deadlines.
What happens if I don’t file?
As we said above, to not file is tax evasion and illegal. There are penalties for not filing and interest can be charged on any unpaid tax. Every late filed return gets an automatic penalty of £100, then if it goes over three months overdue, a charge of £10 per day is applied until it’s filed.
If you go over six months late then another £300 or 5% of the tax owing – whichever is higher – is applied and if it becomes 12 months overdue then the same is applied again.
So if you owed £1,000 in tax and you were a year late then you would owe a total of £2,600 in fines – plus any interest HMRC wanted to charge on the amounts owing.
What can I do?
If you need to file, get an accountant to sort you out and file as soon as possible. Contact us on the details above – we are confidential and do not judge the type of content that you are creating – also our fees are tax deductible and will reduce your tax bill.
Can I reduce the tax I pay?
Once your earnings are around £45k or above then you may be able to make tax savings and carry out better remuneration planning by forming a limited company to process your income. This allows you to pay yourself dividends – which are taxed at a lower rate – and allows you to take advantage of dividend allowances which aren’t available if you are not a company. It’s worth speaking to an accountant to see if could be of benefit to you.
What about VAT?
As of 1 July 2020, OnlyFans announced it would be collecting VAT on behalf on its content creators, and paying any VAT due directly to HMRC.
However, if your gross income from OnlyFans is over £90k (£85k before 1st April 2024) – the amount BEFORE they deduct their fees – you will need to register for and pay VAT to HMRC yourself. You will need Making Tax Digital (MTD) compatible software to file these returns, and that applies whether you are working as a sole trader or through a company.
Again, this is something that most people in that situation will need to speak to an accountant about as it can get complicated.
We do not judge the content you produce or your customers, we are simply here to help you fulfil your filing obligations and make sure you stay compliant – paying what you owe, being tax efficient, and avoiding unnecessary penalties and interest. So if any of the above applies to you then drop us a message at info@flamingo-accounting.co.uk and we can discuss how we can help you.