TikTok Creator Rewards Program and VAT: What Content Creators Need to Know

As a TikTok creator, you might have wondered, ‘Is there VAT on TikTok income?’. If you're earning money through TikTok as a UK creator, understanding your VAT obligations could save you thousands in penalties and unnecessary registrations.

The Three Ways TikTok Pays Creators

Before diving into VAT specifics, it's crucial to understand that TikTok operates three distinct payment systems, each with different tax implications:

1. TikTok Creator Rewards Program

Payment based on views, engagement, and content performance. This replaced the Creator Fund and is the traditional "per view" income that most creators associate with platform monetisation.

2. TikTok Shop Sales

Direct selling of physical or digital products through TikTok's integrated e-commerce platform. You're acting as a retailer, selling goods directly to consumers.

3. Affiliate Commission

Earning commission by promoting other businesses' products through TikTok Shop. You're paid a percentage when someone purchases through your affiliate link.

Each income stream has vastly different VAT implications, and mixing them up is one of the costliest mistakes UK creators make. This guide focuses specifically on TikTok Creator Rewards Program income and its VAT treatment.

TikTok VAT: How it Works

Here's where it gets complicated: not all Creator Rewards Program income is treated the same way for UK VAT purposes. The key factor is which TikTok entity is paying you.

As a TikTok creator, you will receive Creator Rewards Program payments from TikTok Technologies Ltd or through TikTok Pipo Europe. If it's UK-sourced, it can show up on Stripe as ‘TikTok Technologies Ltd’ on your statements.

When Creator Rewards Income is Subject to UK VAT

UK creators are paid directly by TikTok Technologies Limited (the UK entity). When this occurs, your Creator Rewards income becomes subject to standard UK VAT rules:

• It counts towards the £90,000 VAT registration threshold
  
  
• Once registered, you must charge 20% VAT on this income
  
  
• You must issue proper VAT invoices

How to Determine Which Entity Pays You

Check your payment notifications and bank statements. The paying entity should be clearly identified. Look for:

• TikTok Pipo Europe: Generally outside UK VAT scope
  
  
• TikTok Technologies Limited: Subject to UK VAT rules

At Capture Accounting, we've seen creators panic about VAT registration when 90% of their income was actually outside the scope of VAT. We've also helped creators who missed their VAT registration deadline because they assumed all TikTok income was exempt.

The VAT Registration Threshold

You must register for VAT when your UK taxable turnover exceeds £90,000 in any rolling 12-month period. The crucial word here is ‘taxable’, only income subject to UK VAT counts towards this threshold.

What Counts Towards Your VAT Threshold

• Creator Rewards income from TikTok Technologies Limited (UK entity)
  
  
• UK sponsorship and brand partnership income
  
  
• UK-based affiliate commission
  
  
• Any other UK business-to-consumer services

What Doesn't Count

• Creator Rewards income from overseas TikTok entities
  
  
• International brand partnerships with non-UK companies
  
  
• Affiliate commissions from overseas businesses

Reporting Your TikTok Income

Even if your Creator Rewards income is outside VAT scope, you must still report it for income tax purposes if it exceeds the £1,000 trading allowance.

All TikTok Creator Rewards Program income counts as business income for income tax, regardless of which entity pays you. This means:

• Register for self-assessment when earnings exceed £1,000 annually
  
  
• Pay income tax on profits (income minus allowable expenses)
  
  
• Keep detailed records of all payments received

Common VAT Mistakes with Creator Rewards Income

Through working with TikTok creators, we've identified these frequent errors:

1. Assuming all TikTok Income is VAT-free

Many creators incorrectly believe all platform income is outside UK VAT scope, missing registration requirements when paid by UK entities.

2. Registering for VAT Unnecessarily

Conversely, some creators register for VAT based on total TikTok income, not realising most of it doesn't count towards the threshold.

3. Mixing Income Streams

Combining Creator Rewards, Shop sales, and affiliate commission without understanding their different VAT treatments.

4. Poor Record Keeping

Not tracking which TikTok entity makes each payment, making VAT compliance difficult to determine accurately.

 

Expense Claims Against Creator Rewards Income

Regardless of VAT treatment, you can claim legitimate business expenses against Creator Rewards income:

Equipment and Technology

• Cameras, microphones, and lighting
  
  
• Computers, phones, and editing software
  
  
• Internet and phone contracts

Content Creation Costs

• Props and materials
  
  
• Location hire or travel
  
  
• Professional services (editing, design)

Home Office Expenses

• Proportion of rent, utilities, and council tax
  
  
• Office furniture and equipment
  
  
• Insurance and maintenance

If you’d like to learn what else you could claim as expenses through your content, check out our blog post on tax deductions for creators.

Next Steps for TikTok Creators

1. Identify Your Payment Source: Check which TikTok entity pays your Creator Rewards income to determine VAT treatment.
   
   
2. Track Your Threshold: Monitor only the income streams that count towards the £90,000 VAT threshold.
    
   
3. Separate Your Income Streams: Keep Creator Rewards, Shop sales, and affiliate income clearly separated in your records.
   
   
4. Register When Required: Don't delay VAT registration if you cross the threshold with qualifying income.
   
   
5. Maintain Proper Records: Document all payments, expenses, and the source of each income stream. 
   

VAT compliance for TikTok creators isn't straightforward, especially when dealing with multiple income streams and international payments. Understanding the difference between which payments count towards your threshold and which don't could save you thousands in unnecessary VAT registrations or penalties.

At Capture Accounting, we work exclusively with content creators and online businesses, helping hundreds of creators navigate these complexities while ensuring they're compliant without overpaying tax. Contact us today for a discovery call to get your TikTok income properly structured from the start.