HMRC guidance on VAT and off-payroll rules for UK creators explained

What to take away

VAT registration thresholds and when creators must register

The VAT registration threshold is £90,000 of taxable turnover across any rolling 12 months. A creator who crosses it must register. One who expects to cross it in the next 30 days must register sooner. The test looks forward as well as back.

Taxable turnover covers fees, retainers, appearance payments and affiliate commission. It does not include exempt supplies. Free products count only where the contract treats them as payment for a service.

Once registered, a creator charges VAT at the standard rate of 20% on invoices. A fee agreed at £4,000 becomes £4,800 unless the contract says the fee is VAT inclusive. Check that wording before you approve spend.

Some registered creators use the flat rate scheme. It applies a lower percentage to gross turnover and limits input tax recovery on most purchases. The invoice still shows VAT at 20%, so your reclaim is unchanged.

Deregistration uses a lower threshold of £88,000. A creator below it can ask HMRC to cancel the registration. Many stay registered so they can reclaim input tax on equipment and software.

A valid VAT invoice shows the supplier's name, address and VAT number, plus the invoice date and the VAT amount. A fee note will not do. Without a valid invoice you cannot reclaim the input tax.

A creator working through an agency is usually invoiced by the agency, which charges VAT on its own supply. The creator's own VAT status still matters where costs are passed through.

Check the VAT number against HMRC records before the first payment. Our vendor due diligence explained guide covers the wider checks to run before you release funds.

The table below shows the headline figures you will meet most often.

The reverse charge and cross-border creator invoices

The reverse charge mechanism applies to services bought from a supplier based outside the UK. The overseas creator invoices without UK VAT. You account for the VAT on your own return instead of paying it to the supplier.

Place of supply rules put business to business services where the customer belongs. A creator in Berlin, Toronto or Lagos invoices a London agency without UK VAT, and the agency reports the VAT due.

On the return, the VAT goes in box 1 as output tax and in box 4 as input tax. A fully taxable business usually sees the two cancel out. A partly exempt business may not reclaim all of it.

A creator already registered for UK VAT charges VAT as normal, and the reverse charge does not apply. Ask for the VAT number rather than assuming the answer from the creator's address.

Platform fees create a second layer. Where a creator sells through a marketplace, the platform may invoice its own commission with UK VAT. That is a separate supply from the creator's services, so treat the two invoices apart.

Keep evidence of where the supplier is established. Contracts, home country tax numbers, bank details and platform addresses all help. Sound evidence and clear terms make commercial contracts safer if HMRC reviews the return.

Timing matters. The tax point for services is usually the earlier of payment and invoice date. Late accounting for reverse charge VAT can attract interest even where the net cost is zero.

Work through the process in this order.

Off-payroll working status tests for UK creators

Off-payroll working rules apply when a creator supplies services through their own limited company, a personal service company, or an agency chain. The rules decide who deducts PAYE and National Insurance.

The end client is the business receiving the service. Medium and large private sector clients, and all public sector bodies, must make the determination. Small clients are exempt under the Companies Act 2006 definition of small.

Client size decides who carries the duty. The small company test looks at turnover, balance sheet total and employee numbers across the group. A client that fails two of the three tests is exempt, and the creator's own company then applies the older rules.

Off-payroll status tests look at control, substitution, financial risk and mutuality of obligation. Control asks how much direction you give. Substitution asks whether the creator can send someone else. Financial risk asks who carries the cost of poor work.

The client issues a status determination statement to the creator and to any agency in the chain. It must set out the conclusion and the reasons behind it. A conclusion without reasons is not a valid statement.

The creator or the agency can disagree. The client then has 31 days to respond with a reasoned decision. Until that happens, the client stays responsible for the deductions.

Agencies often act as fee payer and operate PAYE where the status is inside IR35. If the client never sends a statement, liability moves back up the chain to the client.

Evidence supporting an outside status includes several clients, own equipment, own insurance, marketing costs and the freedom to refuse work. A single long engagement with set hours points the other way.

IR35 and HMRC manuals on employment status

HMRC manuals on employment status set out the tests in detail. ESM0500 covers the general approach and ESM1100 collects the case law examples. They are the reference point when a determination is challenged.

Control carries the most weight. Where you set the hours, approve every post and require attendance at internal meetings, the engagement looks like employment. Where the creator decides what to publish and when, it looks like a business.

Personal service matters too. A genuine right of substitution, used in practice, points outside IR35. A clause nobody ever uses carries little weight, so record any substitutions that happen.

Financial risk separates businesses from employees. Creators who quote a fixed price, carry remedial costs and can lose money on a job sit closer to outside IR35. Employees do not carry that risk.

Mutuality of obligation asks whether you must offer work and the creator must accept it. A rolling retainer with no right to decline suggests an employment relationship, whatever the contract says.

The Check Employment Status for Tax tool gives an answer where you feed it accurate facts. It does not cover every scenario, and HMRC will stand by a result only where the inputs were correct. Record the answers you entered.

HMRC provides a status tool, but responsibility for the determination stays with you. Reasonable care means applying the manuals to the facts and keeping a record of the reasoning.

The cost effect is real. Inside IR35 engagements add employer National Insurance and pension costs, and often a higher fee to cover the creator's own tax. Build that into your costs and pricing before you sign.

Companies House checks before you contract a creator

Companies House is the official register of UK companies and the authoritative source for company status. Search the free Companies House register before you contract a creator or an agency. It takes minutes and settles basic questions.

Check the company number, incorporation date, directors, people with significant control and filing history. Read the latest accounts and the confirmation statement separately. A dormant company should not be invoicing you for services.

Under company law, businesses must show their registered name, company number, place of registration and registered office on websites and business letters. If those details are missing, ask why.

Filing deadlines are fixed. Accounts are due nine months after the year end for a private company, and the confirmation statement is due once a year. Repeated failure to file can lead the registrar to start strike-off action.

Companies House verification now sits at the centre of company administration. Directors and people with significant control must verify their identity and keep a verified account. Filings from unverified people can be rejected.

The register is not the whole market. Official business population estimates 2024 count UK businesses by size and sector, which helps you judge how many suppliers are genuinely trading rather than holding a shell.

Look for outstanding charges, insolvency notices and gazette entries. Late accounts and a pattern of director resignations are warning signs. Make this review the first item in any supplier comparison you run.

Use this checklist before you sign.

Rates and thresholds for budgeting creator payments

For 2024 to 2025, employer National Insurance is charged at 13.8% on earnings above the secondary threshold of £9,100 a year. The employment allowance, up to £5,000, reduces the bill for smaller employers. These figures set the floor for inside IR35 engagements.

The apprenticeship levy adds 0.5% on payroll above £3 million. Levy funds are devolved, so training support differs in Scotland, Wales and Northern Ireland. Most creator campaigns sit far below the threshold.

VAT sits on top of most creator fees. Where the creator is UK VAT-registered, budget the gross amount. Where the reverse charge applies, budget the net amount and the return entries instead.

Agency commission usually runs between 10% and 30% of the creator fee, depending on the service. Compare the pricing models on our site before you approve a percentage. The commission base matters as much as the rate.

Budget for expenses too. Travel, equipment and platform subscriptions are the creator's costs, not yours, unless the contract says otherwise. Where you reimburse them, the VAT treatment follows the original supply.

Cross-border payments add currency spread and transfer fees. A creator paid in euros or dollars receives slightly less than the headline figure. Agree who absorbs that cost in the contract.

The official rates and thresholds for employers 2024 to 2025 are published by HMRC, and they are the figures to quote in budget papers. Employed creators also fall under the National Living Wage, which is £11.44 an hour for workers aged 21 and over.

Records, penalties and HMRC compliance evidence

VAT records must be kept for six years. That covers invoices, credit notes, import and export documents and reverse charge workings. Electronic records are fine if they stay readable and complete.

Off-payroll rules need a different file. Keep the status determination statement, the reasons behind it, the contract terms and evidence of how the creator actually worked. HMRC can ask for all of it.

Creator payment data is personal data in most cases. UK GDPR obligations cover bank details, addresses and identity documents, so process them on a lawful basis and keep them secure. The ICO enforces this.

Penalties for VAT are points based. Late submissions build points, and a financial penalty follows once the threshold is reached. Late payment attracts interest from the due date.

Inaccuracy penalties depend on behaviour. Careless errors cost less than deliberate ones. A documented process, with checks before payment, supports a careless finding rather than a deliberate one.

HMRC can open a compliance check into VAT returns and off-payroll determinations. It will ask for the contract, the working practices and the payment records. Reply within the deadline given and keep copies of everything you send.

Keep one folder per creator with the VAT number, Companies House number, status determination, contract and invoices. Review it each year and delete personal data you no longer need.

Common questions