VAT for Streamers: The UK Guide to Income and Affiliate Revenue

Your streaming started as a fun hobby, but now you're making serious money from streaming on Twitch and YouTube. If you're earning substantial income, you're probably wondering whether you need to register for VAT.

The confusion is understandable. Streamers earn through complex international payment systems, and each income source has different VAT implications. Getting it wrong can be costly.

Do You Need to Pay VAT on Streaming Income?

The short answer: Most streamers don't need to register for VAT because the majority of their income comes from international platforms that are out of scope for UK VAT purposes.



However, once your UK-relevant turnover exceeds £90,000 in any 12-month period, registration becomes mandatory.

The key is understanding which income streams actually count towards the VAT threshold. Not all streamer income is treated equally by HMRC.

What Income Counts Towards the VAT Threshold?

VAT registration depends on your "taxable turnover" - not your total income. This is where many streamers panic when their overall earnings hit £90,000.

Income that's usually OUT OF SCOPE for UK VAT:

• YouTube AdSense revenue (paid by Google Ireland)
  
  
• Twitch ad revenue and subscriptions (processed internationally)
  
  
• Most international affiliate programmes

Income that IS SUBJECT to UK VAT:

• UK-based sponsorship deals
  
  
• Direct partnerships with UK companies
  
  
• UK affiliate programmes where you're paid directly by UK businesses
  
  
• Merchandise sales to UK customers
  
  
• Most gifts from UK brands
   
• Donations via Patreon / Paypal other payment processors direct from consumers

When YouTube pays you AdSense revenue, you're technically providing a service to Google Ireland, not to UK viewers. This makes it out of scope for UK VAT.

Real Example

Let's say you earn:

• YouTube AdSense: £60,000 (out of scope)
  
  
• UK sponsorship deals: £25,000 (subject to VAT)
  
  
• International affiliate income: £20,000 (likely out of scope)
  
  
• Total income: £105,000
  
  
• VAT-relevant turnover: £25,000

You wouldn't need to register for VAT because your relevant turnover is well below the threshold, despite earning over £100,000 annually.

How Different Platforms Handle VAT

YouTube and Google AdSense

YouTube operates through Google Ireland Limited for UK creators. This means:

• Your AdSense payments are out of scope for UK VAT
  
  
• Google handles any EU VAT obligations
  
  
• It doesn't count towards your £90,000 threshold

Twitch Revenue

Twitch processes most payments internationally:

• Ad revenue comes through international entities
  
  
• Bits and subscriptions are handled globally
  
  
• Most payments to UK streamers are out of scope
  
  
• Only direct UK sponsorships may be subject to VAT

Direct Sponsorships

This is where VAT becomes relevant:

• UK companies paying you directly = UK VAT applies
  
  
• International companies = likely out of scope
  
  
• Always check the paying company's location

Affiliate Income and VAT

Whether your affiliate income is subject to UK VAT depends on the company's location.

UK-based programmes: If UK companies pay you directly, this income is subject to UK VAT once you exceed the threshold.

International networks: Major platforms like Amazon Associates operate through international entities, making payments out of scope for UK VAT.

Examples:

• Amazon Associates: Payments from Amazon's international operations, typically out of scope
  
  
• Direct brand partnerships: If a UK gaming company pays you directly, this is subject to UK VAT

When Should You Register for VAT?

You Must Register If:

Your VAT-relevant turnover exceeds £90,000 in any rolling 12-month period.

You Might Choose to Register If:

• You have significant business expenses and want to reclaim VAT
  
  
• Most of your income comes from UK sources
  
  
• You're planning rapid growth

VAT Reclaim Benefits

Once VAT registered, you can reclaim 20% VAT on:

• Cameras, lighting, microphones
  
  
• Gaming hardware, PCs, monitors
  
  
• Streaming software subscriptions
  
  
• Professional fees (accountancy, legal)

Example:  Spend £15,000 on equipment and services? Reclaim £2,500 in VAT.

Common Mistakes Streamers Make

Beyond VAT-specific errors, streamers often make broadertax mistakes that can be costly. Here are the key VAT mistakes to avoid:

Mistake 1: Panicking About Total Income

Many streamers think their £100,000+ total income automatically requires VAT registration. If most income comes from international platforms, you may not need to register.

Mistake 2: Not Tracking UK vs International Income

You need to distinguish between UK-sourced income (subject to VAT) and international platform income (typically out of scope).

Mistake 3: Missing UK Sponsorships

Platform income might be out of scope, but that £30,000 UK sponsorship deal definitely counts towards your VAT threshold.

Mistake 4: Poor Record Keeping

HMRC expects detailed records showing:

• Which entity paid you
  
  
• The location of each paying company
  
  
• The nature of each payment

VAT Bookkeeping for Streamers: Practical Steps

1. Categorise Your Income

Track separately:

• Platform payments (usually out of scope)
  
  
• UK sponsorships (subject to VAT)
  
  
• International brand deals (likely out of scope)
  
  
• Affiliate income (depends on paying entity)

2. Monitor VAT-Relevant Turnover

Keep a running total of only the income that counts towards £90,000. This is often much lower than your total streaming income.

3. Keep Detailed Records

Document everything:

• Payment confirmations showing the paying entity
  
  
• Invoices for business expenses
  
  
• Contracts with sponsors

What Happens If You Get VAT Wrong?

HMRC takes VAT compliance seriously.

Late registration penalties: Based on how long you were overdue, plus interest on unpaid VAT.

Incorrect VAT treatment: Charging VAT when you shouldn't (or vice versa) results in significant costs.

These issues are avoidable with proper planning and professional guidance.

When You Need Professional Help

Consider professional advice if:

• Your income is approaching the VAT threshold
  
  
• You have substantial UK-based sponsor income
  
  
• You're expanding into merchandise or courses
  
  
• HMRC has contacted you about VAT

At Capture Accounting, we exclusively serve content creators and online entrepreneurs. We understand the unique VAT challenges streamers face because we see them daily.

The Reality for Most Streamers

The vast majority of UK streamers don't need to worry about VAT registration because most income comes from international platforms that handle VAT compliance themselves.

However, as your business grows - particularly with UK-based sponsorships - VAT becomes more relevant. The key is understanding which income streams actually count.

Your Next Steps

If you're uncertain about your VAT position, don't leave it to chance. The cost of getting it wrong far exceeds the investment in proper advice.

We specialise in helping streamers navigate these exact challenges. We'll analyse your income sources, determine your actual VAT liability, and create a clear plan for your business.

You've worked hard to build your audience and turn your passion into profit. Don't let VAT confusion derail your success.

Book a callwith our specialist team to get the clarity you need.