What is Only Fans Background?
Our founder has over 20 years’ experience working in HMRC as well as having professional tax qualifications. All of our staff have either HMRC or an accountancy background.
You’ve highlighted an important aspect of OnlyFans and the variety of content creators who utilise the platform to generate income. While adult content is commonly associated with OnlyFans, it’s worth noting that there are also creators in diverse categories such as artists, chefs, and famous individuals who offer paywall content.
The growth of OnlyFans during the lockdowns of 2020 and 2021 was indeed significant, attracting both visitors and producers who recognised the platform as a means to generate additional or primary income. However, this growth also raises important considerations regarding creator finances and tax obligations.
As with any form of income, it is essential for creators on OnlyFans to understand their tax responsibilities and ensure compliance with tax laws. Generating income through the platform means that individuals may have to report their earnings and pay applicable taxes.
Creators on OnlyFans should keep track of their earnings from subscriptions, pay-per-view features, and tips received. It is advisable to maintain accurate records of income and related expenses, as these will be necessary for tax reporting purposes.
Depending on the jurisdiction in which the creator resides, different tax regulations and requirements may apply. It’s important for creators to consult with tax professionals or accountants who are familiar with the tax laws in their specific jurisdiction. These experts can provide guidance on tax obligations, potential deductions or allowances, and help ensure that creators meet their tax obligations in a compliant manner.
By being proactive and properly managing their finances, creators on OnlyFans can navigate the tax implications associated with their earnings and avoid potential issues or penalties related to non-compliance.
It’s crucial for creators to be aware of their tax responsibilities and seek appropriate professional advice to ensure they are compliant with the tax laws in their jurisdiction.
What is an OnlyFans Creator?
OnlyFans provides creators with a platform to monetise their content and engage directly with their fans. Creators can leverage their careers, whether they are YouTubers, Instagram models, or individuals with other talents, to generate income through the platform.
Creators on OnlyFans have the flexibility to share various forms of content, including pictures, text, and videos, with their followers. By setting a subscription cost of their choosing, creators can offer exclusive or premium content that entices users to subscribe and become paying fans.
The unique aspect of OnlyFans is that it allows creators to offer content that may not be available on other social media platforms due to its explicit nature or other limitations. This exclusivity encourages fans to join and pay for access to the creator’s premium material.
Creators have the option to create free or paid pages, and fans can choose to pay a subscription fee to access the creator’s content. This direct monetisation model enables creators to have a more direct and intimate relationship with their fans while generating income based on the value they provide.
It’s important for creators on OnlyFans to understand the financial and tax implications of their earnings through the platform. Keeping track of their income, managing expenses, and ensuring compliance with tax laws are essential aspects of running a successful and sustainable creator business on OnlyFans.
As mentioned before, seeking advice from tax professionals or accountants who are familiar with the tax laws in their jurisdiction can help creators navigate their tax obligations and ensure compliance. This will enable creators to focus on creating and engaging with their fans while managing their financial affairs responsibly.
How to create content for OnlyFans
Creating a profile on OnlyFans is a straightforward process that requires providing some basic information. As a creator, you need to be at least 18 years old due to the adult nature of the platform. The steps involved in creating a profile on OnlyFans include:
Registration: You need to enter your email address, set a password, and provide your identification (ID) as a security measure to verify your age and prevent minors from using the platform.
Bank Information: You will be required to provide your bank details to receive payments from your subscribers. OnlyFans uses this information to facilitate direct payments to creators.
Revenue Sharing: OnlyFans retains 20% of each user’s transaction, meaning you receive 80% of the amount paid by your subscribers. For example, if a subscriber pays £20, you will receive £16.
Free Content and Additional Features: While subscriptions are the primary revenue stream on OnlyFans, you can also choose to make certain content available for free. This can help attract followers and engage with a wider audience. Additionally, you can explore other features such as pay-per-view content and receiving tips from your fans, which can contribute to your earnings.
Subscription Fee: You have the option to set a subscription fee that your customers will have to pay to access your content. OnlyFans has minimum and maximum monthly amounts that you can charge for subscriptions. However, you can adjust your subscription fee later if needed.
It’s important to note that with the growing number of creators on the platform, it’s crucial to be consistent in producing content if you want to attract and retain subscribers. Building a following requires offering valuable and engaging content that encourages fans to subscribe and support you.
Understanding the dynamics of the platform and considering a reasonable subscription fee can help you gain a following and generate revenue. Monitoring your performance, engaging with your audience, and continuously evaluating your content strategy can contribute to your success as an OnlyFans creator.
Remember to keep track of your earnings and maintain accurate financial records to fulfill your tax obligations in accordance with the tax laws in your jurisdiction. Seeking professional advice from tax experts or accountants is recommended to ensure compliance and manage your finances effectively as an OnlyFans creator.
Do I pay taxes on my OnlyFans earnings?
That’s correct. In the UK, if your annual income from OnlyFans or similar websites is less than £1,000, you don’t need to take any action or pay income tax on that income. This is because of the tax-free trading allowance of £1,000 per tax year.
However, if your income from OnlyFans exceeds £1,000 per year, you are required to file a tax return with HMRC. It’s important to note that exceeding the £1,000 threshold does not necessarily mean you will owe taxes. HMRC wants to gather information about your earnings to ensure compliance in case your income increases in the future.
If your total income, including earnings from OnlyFans, exceeds the personal allowance threshold (currently £12,570 for the tax year 2023/24), you will be required to pay income tax on the amount that exceeds the personal allowance. This applies to all self-employed income, including income from OnlyFans, whether it’s your primary source of income or a side hustle.
It’s crucial to keep accurate records of your earnings and expenses related to OnlyFans and any other sources of income. This will help you accurately report your income on your tax return and determine any tax liability. Consulting with a tax professional or accountant who specialises in self-employment income is recommended to ensure compliance with tax laws and maximise your tax efficiency.
Income Tax bands
The income tax rates in the UK for the tax year 2023/24. Here’s a breakdown of the tax rates based on different income thresholds:
- 0% tax: If your total income is below the personal allowance threshold (£12,570 for the tax year 2023/24), you won't have to pay any income tax.
- Basic rate (20%): If your income falls between £12,571 and £50,270, you'll be subject to the basic income tax rate of 20%.
- Higher rate (40%): If your income is between £50,271 and £150,000, you'll be subject to the higher income tax rate of 40%.
- Additional rate (45%): Any income above £150,000 will be subject to the additional income tax rate of 45%.
It’s important to note that these tax rates apply to your total income, including earnings from OnlyFans and any other sources of income. Your specific tax liability will depend on the total income you earn and any applicable allowances, deductions, or exemptions you may be eligible for. Consulting with a tax professional or accountant can provide personalised guidance based on your specific circumstances.
Should I form a limited company?
Forming a limited company can be a tax-efficient option for individuals earning higher incomes. Here are a few considerations when deciding whether to operate as a sole trader or form a limited company:
Sole Trader:
- Simplicity: Operating as a sole trader is straightforward and involves fewer administrative responsibilities and reporting requirements compared to a limited company.
- Personal liability: As a sole trader, you are personally liable for any business debts or liabilities.
- Income tax: As a sole trader, your business income is taxed as part of your personal income at the applicable income tax rates.
Limited Company:
- Separate legal entity: A limited company is a separate legal entity from its owners, providing limited liability protection for the shareholders.
- Corporation tax: Limited companies are subject to corporation tax on their profits, which is currently 19% to 25% in the UK. This rate is typically lower than the higher income tax rates for individuals.
- Dividends: As a shareholder and director of a limited company, you can receive income through a combination of salary and dividends. Dividends are subject to dividend tax rates, which are generally lower than income tax rates.
- Additional responsibilities: Forming a limited company entails additional administrative responsibilities, such as filing annual accounts and maintaining company records.
The decision to operate as a sole trader or form a limited company depends on various factors, including your income level, future business plans, personal circumstances, and the level of administrative complexity you are willing to undertake. It’s recommended to consult with a qualified accountant or tax advisor to evaluate your specific situation and make an informed decision.
Self-Assessment and Income Tax
Self-employed individuals, including sole traders, are required to submit a self-assessment tax return each year to report their business income, deductible expenses, and calculate the tax liability. Here are some key points regarding self-assessment tax returns:
Deadline: The deadline for submitting the self-assessment tax return online is generally 31st January following the end of the tax year. For example, the deadline for the tax year 2022/2023 would be 31st January 2024. If you prefer to submit a paper return by post, the deadline is usually 31st October.
Registration: Before submitting a self-assessment tax return, you need to register with HM Revenue & Customs (HMRC) as self-employed and obtain a Unique Taxpayer Reference (UTR) if you haven’t already done so. You must do so by 5 October following the end of the tax year. So for the 2022/23 tax year you must register by 5 October 2023
Income and Expenses: You’ll need to report all your self-employed income from sources such as OnlyFans, as well as any other relevant income. You can deduct allowable business expenses to calculate your taxable profit. Keep records of your income and expenses throughout the year to support your tax return.
Payment: The self-assessment tax return will calculate the amount of tax you owe based on your taxable profit. The payment is generally due by the same deadline as the tax return (31st January). Late payments may incur interest and penalties.
Online submission: Submitting your self-assessment tax return online is typically more convenient and allows you to receive instant calculations and prompts for missing information. You can use HMRC’s online services or compatible software to complete and file your tax return electronically.
It’s essential to ensure you meet the deadlines and accurately report your income and expenses on your self-assessment tax return. Consider seeking professional advice from an accountant or tax advisor to help you with the process and ensure compliance with tax regulations.
OnlyFans VAT
If you are a self-employed taxpayer in the UK or a business owner with a taxable income turnover of £85,000 or more, you are generally required to register for Value Added Tax (VAT). Registering for VAT involves applying to HM Revenue and Customs (HMRC) to obtain a VAT number.
To ensure accuracy and clarity regarding the VAT registration process and any specific requirements related to OnlyFans, it would be advisable to consult directly with a qualified accountant or reach out to the customer support of OnlyFans for guidance on how to update your account information and provide your VAT registration number, if necessary.
VAT, which stands for Value Added Tax, is a consumption tax that is levied on most goods and services provided in the UK and many other countries. It is an indirect tax that is ultimately borne by the final consumer.
The VAT system is designed so that the tax is collected at each stage of the supply chain. Businesses are responsible for charging VAT on their sales (output VAT) and can usually reclaim VAT paid on their purchases (input VAT). The difference between the output VAT and input VAT is the amount that is remitted to the tax authorities.
In the UK, the standard rate of VAT is currently set at 20%. However, there are also reduced rates and exemptions for certain goods and services. It’s important for businesses to understand the VAT rules and regulations to ensure compliance and accurate reporting.
It’s worth noting that VAT rates and regulations may vary in different countries, so it’s important to consult the specific guidelines provided by the tax authority in the relevant jurisdiction for accurate and up-to-date information.
To summarise:
- You must register for VAT if your self-employment income, including earnings from platforms like OnlyFans, exceeds £85,000 in the past 12 months.
- You must also register for VAT if you anticipate earning more than £85,000 in the next 30 days.
- If you are not located in the UK but your company is located outside the UK and you supply goods or services to the UK (or expect to do so in the next 30 days), you are required to register for VAT.
Additionally, it is worth noting that voluntary registration for VAT is possible even if the turnover thresholds are not met. This can allow you to reclaim VAT paid on business expenses, which can result in cost savings. However, it also means that you will need to charge and account for VAT on your sales, effectively paying a portion of each transaction to HMRC.
It is important to consult with a qualified accountant or HMRC directly to determine your specific VAT obligations and the implications of VAT registration based on your individual circumstances. They can provide tailored advice and guidance based on the most up-to-date regulations and requirements.
If OnlyFans has implemented a procedure where they pay the VAT in full to HMRC on behalf of the creators, it means that OnlyFans takes responsibility for collecting and remitting VAT on the services provided by the creators. This can help ensure that the revenue share between creators and OnlyFans remains consistent, regardless of the location of the creator or fan.
It’s important to note that company policies and procedures can change over time, and the information we have access to may not reflect the most recent updates or changes implemented by OnlyFans. Therefore, for the most accurate and up-to-date information regarding OnlyFans’ VAT procedures and the 80/20 revenue split, it is recommended to contact OnlyFans directly or consult their official documentation and terms of service.
If you are an unregistered creator on OnlyFans with an annual income below £85,000, OnlyFans takes care of collecting the VAT on your sales. OnlyFans automatically adds 20% VAT to the subscription pricing set by creators. For example, if you set your subscription price at £10, OnlyFans will charge £12 to your subscribers (£10 for the subscription and £2 for VAT).
After deducting their cut (20% of the set price) and the VAT (£2), OnlyFans will provide you with your share, which is 80% of the set price (£8). OnlyFans will then directly pay the VAT collected to HMRC.
It’s important to note that specific policies and procedures regarding VAT can vary, and it’s always advisable to consult OnlyFans’ official documentation or reach out to their customer support for the most accurate and up-to-date information regarding VAT collection and payment on the platform.
- OnlyFans will automatically add 20% VAT to your subscription pricing if you charge £10, making the total price £12 for subscribers.
- OnlyFans will provide you with your share, which is 80% of your specified price (£8), and your portion of the VAT (20% of £8 is £1.60).
- As a registered VAT business, you are responsible for remitting your portion of the VAT (£1.60) to HMRC. OnlyFans will pay you this amount separately from your regular earnings.
- OnlyFans keeps its cut (20% of your set price, which is £2), as well as its portion of the VAT (20% of its earnings, which is £0.40), and pays these amounts directly to HMRC.
- To facilitate the payment process, OnlyFans requests your valid VAT number and confirmation of acceptance of the self-billing agreement in the OnlyFans Bank area.
- OnlyFans conducts security checks before making VAT payments. You will need to email vat@onlyfans.com with proof of filing your VAT return to receive the payment.
- In the VAT documents section under “Statements,” you can create VAT invoices. You can then upload the invoices using the “Add Documents” option.
- OnlyFans will pay you your earnings (80% of fans’ payments) and the VAT in separate installments to facilitate the transfer of the necessary amount to HMRC.
- OnlyFans will provide you with a VAT statement that details the amount, which you can use to complete your VAT return and ensure the correct sum is paid to HMRC.
It’s important to note that the process and requirements may vary, and it is advisable to refer to OnlyFans’ official documentation, follow their specific instructions, and consult with a tax professional for accurate guidance regarding VAT procedures, reporting, and payments on the platform.
As a content creator, you may have various operating expenses that can be deducted from your taxable income, provided they qualify as allowable expenses. Here are some common expenses that content creators may incur:
- Equipment and Technology: This includes the cost of purchasing and maintaining equipment such as a lapbook computer, camera, smartphone, image and video editing programs, lighting materials, lighting accessories, and other necessary equipment.
- Transportation: If your work involves travel, expenses related to transportation, such as fuel costs, public transport fares, or rental car fees, may be deductible.
- Props and Materials: Costs associated with purchasing or renting props for your content can be considered as allowable expenses.
- Home Office Expenses: If you work from home, you may be able to claim a portion of your rent, phone, broadband, and electricity bills as business expenses. This is typically done by calculating the proportion of your home that is used as a dedicated workspace.
- Gym Fees: If maintaining a certain physical appearance is essential for your content creation, you may be able to claim gym or fitness-related expenses as allowable expenses.
- Beauty Treatments and Clothing: Expenses incurred for beauty treatments or clothing used specifically for your content creation may be deductible, but there are usually specific criteria and limitations for these types of expenses.
- Accommodation: If you use Airbnb or other accommodation for filming purposes, the related expenses can potentially be claimed as allowable expenses.
- Travel: Expenses related to business-related travel, such as accommodation, meals, and transportation, may be deductible.
- Office Supplies: Costs for office supplies, such as stationery, printing materials, and postage, can be considered as allowable expenses.
- Advertising: Expenses for advertising and promoting your content, including social media advertising or marketing campaigns, may be deductible.
- Accountancy Fees: Fees paid to accountants or tax professionals for assistance with your tax affairs can be claimed as allowable expenses.
- Computer Costs: Expenses related to computer maintenance, repairs, or software licenses can be deductible.
It’s important to note that tax laws and regulations may vary, and specific rules apply to the deductibility of expenses. It’s advisable to keep accurate records of your expenses and consult with a qualified accountant or tax professional to ensure compliance with the relevant tax laws and to maximise your allowable deductions.
HMRC Contractual Disclosure Facility
The Contractual Disclosure Facility (CDF) is indeed a framework used by HMRC for significant fraud investigations. It provides a structured process for individuals or businesses to disclose their tax irregularities voluntarily while receiving certain protections from legal action.
It is important to note that the CDF can be utilised not only in cases of fraud investigations but also for individuals or businesses who wish to update their tax affairs voluntarily. By disclosing any tax shortcomings to HMRC through the CDF, individuals can benefit from protection against criminal prosecution for the disclosed tax irregularities. The CDF allows individuals to rectify their tax position and make arrangements to address any outstanding tax liabilities.
For individuals who discover that they have not paid the tax they should have, voluntarily disclosing this information to HMRC through the CDF can provide relief and alleviate concerns. Seeking assistance from specialists who are well-versed in the CDF process can help navigate the disclosure and ensure that individuals are aware of their best options.
We at Lexicon Tax specialise in CDF and Code of Practice 9 (COP9). Contact us if you need assistance with this.
Why disclose?
Taking the step to rectify tax affairs can indeed be a significant relief for individuals, and having knowledgeable accountants to guide them through the process is valuable.
Offering guidance before initiating any communications with HMRC is sound advice. It ensures that individuals have a clear understanding of the process and can make informed decisions regarding their disclosures.
Our expertise in handling disclosures through the Contractual Disclosure Facility and assisting clients in making voluntary disclosures could be very valuable for you. Staying up to date with HMRC campaigns and initiatives is also important to provide accurate and relevant guidance to clients which is why we keep updating with all the latest going ons in HMRC.
We encourage individuals to seek guidance early on, even if they ultimately don’t require our services.
We offer free initial consultations that allows individuals with no pressure sales and no commitment.
Do you need assistance telling HMRC something?
We at Lexicon Tax are specialists in dealing with HMRC. We have ex HMRC staff many with decades of experience. It costs nothing to have a no obligation completely confidential chat. So give us a call on 01144 000192 today and we will see how we can help.
Tax Accountants for OnlyFans Creators
We have experience in assisting OnlyFans content creators with their tax matters. Providing qualified and experienced tax accounting services can be invaluable for individuals navigating the complexities of tax regulations and ensuring tax efficiency.
Helping content creators understand their tax obligations, including filing tax returns with HMRC, is crucial to ensure compliance and minimise tax liabilities within the legal framework.
By leveraging our expertise, we can provide valuable guidance and support to content creators, helping them optimise their tax situation while ensuring adherence to tax regulations.
Remember, for personalised advice tailored to individual circumstances, it’s always recommended to consult directly with qualified professionals or HMRC.
How we assist OnlyFans Creators
Our accounting firm offers comprehensive services to assist content creators with their tax matters. Providing support in handling HMRC disclosures, managing letters and checks from HMRC, filing tax returns, and tax planning can be extremely beneficial for content creators who want to focus on their creative work while ensuring compliance with tax obligations.
Handling HMRC disclosures can be a complex and sensitive process, and having experienced professionals who understand the intricacies of such matters can provide peace of mind for content creators. Similarly, managing letters and checks from HMRC requires careful attention to detail and timely responses, and having experts who can handle these interactions can save creators valuable time and effort.
Filing tax returns accurately and on time is essential to meet tax obligations, and having an accounting firm that specialises in this area can ensure compliance while maximising available deductions and tax efficiency.
Tax planning is another valuable service that can help content creators optimise their tax position and plan for the future. By taking advantage of available tax reliefs, allowances, and structuring options, creators can minimise their tax liabilities and achieve long-term financial goals.
Overall, our services provide content creators with the support and expertise needed to navigate the complexities of tax matters, allowing them to focus on their creative endeavors and audience growth.
How can Lexicon Tax help?
Our accounting firm takes care of bookkeeping, accounts, and tax returns for business owners, allowing them to focus on growing their business. Managing financial records and tax obligations can be time-consuming and complex, and having professionals who specialise in these areas can provide peace of mind and enable business owners to allocate their time and resources more effectively.
By taking care of bookkeeping tasks, such as recording transactions, maintaining financial records, and reconciling accounts, we help ensure accurate and up-to-date financial information for the business. This is crucial for making informed business decisions and meeting reporting requirements.
Managing accounts involves preparing financial statements, analysing financial performance, and providing insights into the financial health of the business. This information can be invaluable for business owners in assessing profitability, identifying areas for improvement, and making strategic decisions.
Handling tax returns is an important aspect of compliance and ensuring that the business meets its tax obligations. By preparing and filing tax returns accurately and on time, we help minimise the risk of penalties and ensure compliance with tax laws and regulations.
Our services offer business owners the convenience of outsourcing their financial tasks to professionals with expertise in accounting and taxation. This allows them to focus more on core business activities, such as expanding their operations and serving their customers.
No matter what your concern, contact Lexicon Tax on 01144 000192 to arrange a free consultation to see how we can help you stay on the right side of the taxman.
