The OSA fees regime

The Online Safety Act stipulates that Ofcom, as the regulator, should be funded for carrying out its duties under the Act by fees levied on industry. This is not unusual - other sectors also have to pay for their regulation in this way. But one aspect of the regime - the idea of qualifying world revenue (QWR) - is new to this regime (though it was also subsequently used in the Media Act 2024). This introduction likely reflects the fact that many of the companies in the UK market are global corporations. According to Ofcom (as set out in its tariff tables), the budget associated with Ofcom’s Online Safety work reached £92m in FY 2025/2026, up from £71m in FY 2024/25. This explainer sets out the specific provisions and duties set out in relation to the fee regime in the Act, and its implementation by Ofcom. Given the scale of the sums involved, this explainer also introduces some of the likely challenges to the fees regime.

What the Act says

Part 6 of the Online Safety Act 2023 (OSA) sets out the duties on regulated providers in respect of fees levied under the regime: these comprise a duty to notify and a duty to pay fees. The duty to notify requires providers to notify Ofcom in a “fee-paying year” which is a year in which:

“the provider’s qualifying worldwide revenue (QWR) for the qualifying period that relates to that charging year is equal to or greater than the threshold figure that has effect for that charging year.”

This means that the duty to notify only kicks in if the provider’s revenue exceeds a certain minimum amount - so providers below that threshold do not have to notify. That threshold is set by the Secretary of State and is currently £250 million. The purpose behind this threshold is to ensure that small businesses are not subject to too significant a financial burden. Providers will be exempt from the fees-related duties in respect of a particular charging year if their revenue arising in connection with the relevant parts of regulated services to UK users is less than £10 million in the relevant qualifying period. According to the Secretary of State, this aims to ensure that the fees regime does not act as a disincentive to companies seeking to enter the UK market. These thresholds may be changed when appropriate.

In the initial charging year (which is 2026/27), providers had to notify Ofcom “within four months of the date on which the first regulations under section 86 came into force” (s 83 (5) (a)).

The duty in relation to fees is that providers must pay fees as calculated by Ofcom based on the provider’s QWR for the “qualifying period” relating to that “charging year”. Note that the “qualifying period” and the “charging year” are not the same years. The qualifying period pre-dates the “charging year” to which it is relevant. So for the initial 2026/27 charging year, the qualifying period is the 2024 calendar year. This gap probably reflects the fact that providers will need time to get their accounts in order to know what their qualifying revenue is. If there is a disagreement between the provider and Ofcom, the amount of QWR and/or the fee is to be “the amount determined by Ofcom”. (s 84 (3) (b)).

The fees are to be determined with reference to a statement of principles produced by Ofcom, following guidance from the Secretary of State (s 87), with the threshold figure applying to both duties to be determined after a consultation by Ofcom (s 86), coming into force via regulations laid by the Secretary of State. The Secretary of State is required to keep the threshold figure under review and can instruct Ofcom to carry out further consultations on revisions to that figure.

The Act gave Ofcom powers (s 85) to make regulations about both the QWR and “qualifying period” and related considerations, and also to specify which providers are exempt. It also set out (s 88) that the principles Ofcom set out in its statement on fees (following guidance from the Secretary of State) must be such as “appear to Ofcom to be likely to secure, on the basis of such estimates of the likely costs as it is practicable for them to make (a) that on a year by year basis, the aggregate amount of the fees payable to Ofcom under section 84 is sufficient to meet, but does not exceed, the annual cost to Ofcom of the exercise of their online safety functions; (b) that the fees required under section 84 are justifiable and proportionate having regard to the functions in respect of which they are imposed; and (c) that the relationship between meeting the cost of the exercise of those functions and the amounts of the fees is transparent.”

After the end of each charging year, Ofcom is required to report on the aggregate amount of the fees received and the amount left outstanding, along with the cost of the exercise of their online safety functions.

Recovery of Ofcom’s initial costs

Schedule 10 makes provision for Ofcom to recover its initial costs - prior to the first day of the initial charging year - by charging additional fees to providers over a number of years, with the length of the first phase of cost recovery to be set out in regulations. At the end of the first phase, Ofcom has to make a statement after which the Secretary of State will determine how much the outstanding amount of costs should be reduced by and the additional fees that can be charged in the second phase.

Penalties

Section 141 of the Act sets out the enforcement options open to Ofcom with respect of non-payment of fees. Ofcom has powers to give providers a notice if the full amount of fees has not been paid and can also state if Ofcom intends to impose a penalty on the provider. Providers can make representations to Ofcom about the notice, but if the provider does not pay the fees within the period specified by Ofcom, that penalty may be imposed. 141 (10) states that “Nothing in this section affects OFCOM’s power to bring proceedings (whether before or after the imposition of a penalty by a notice under subsection (6)) for the recovery of the whole or part of an amount due to OFCOM under section 84 or Schedule 10” Section 142 sets out the information which must be provided in a notice given under s141. Schedule 13 of the OSA sets out the principles and maximum amounts of penalties that can be imposed by Ofcom under the OSA, including in respect of non-payment of fees: the maximum amount is £18 million or 10% of the person’s QWR for the most recent complete accounting period.

How the fees regime is being implemented

Since the OSA came into force in October 2023, DSIT and Ofcom, who are jointly responsible for the fee regime, have worked through the series of milestones and decision points required by the Act, with embarking on a series of consultations, after which corresponding regulations have been laid.

The first plank of implementation was the issuing of guidance, as required by the OSA, by the Secretary of State which was laid in Parliament. This guidance set out detail on the following principles for the fees regime:

• Proportionality - fees must be applied in a proportionate way to the range of regulated providers, considering revenue and any other relevant factors, as well as recognising the potential burden on providers
• Transparency - it should be clear to firms what fees they are paying and why they are paying them
• Stability – the principles used to set fees should be clear and consistent so that industry is able to understand how fees will be calculated so they are able to incorporate this into long term plans.

Ofcom consulted on its Statement of Online Safety Fees and Penalties between October 2024 and February 2025 and it was published in its final form in June 2025. It sets out the following decisions:

• Definition of QWR: the total revenue of a provider referable to the provision of the following parts of regulated services anywhere in the world: first, the parts on which regulated user-generated content may be encountered; second, the parts on which search content may be encountered; and third, the parts on which regulated provider pornographic content may be encountered.
• Apportionment: Where revenue arising in connection with relevant parts of regulated services cannot be separately identified from revenue arising in connection with other parts of those regulated services (or non-regulated services), providers should apportion revenues using a just and reasonable approach.
• Aggregation; providers should aggregate revenue from the relevant parts of all their regulated services for the purposes of calculating QWR.
• UK Revenue Exemption: providers of regulated services whose UK referable revenue is less than £10 million are exempt from fee-related duties.
• QWR Threshold for paying fees: the Secretary of State was advised to set the QWR threshold, at or above which providers of regulated services will be required to pay fees, at £250 million.
• Joint and Several Liability for Penalties; a different definition of QWR was adopted for the purposes of determining the maximum penalty cap when we find a provider and one or more undertakings in a group of companies jointly and severally liable for breaches of the Act. In this situation, QWR will be defined as the worldwide revenue from all companies within a group, regardless of whether that revenue is referable to a regulated service.
• Statement of Charging Principles (SoCP): prior to a separate consultation on the SoCP, Ofcom set out its decision to set fees solely on a provider’s QWR and to adopt a single percentage of revenue approach so that, in a charging year, each provider liable to pay fees would pay the same percentage of their QWR, anticipating a tariff in the region of 0.02 – 0.03%.
• Notification: providers should electronically notify Ofcom of their liability to pay fees. This notification should include evidence supporting the details of providers’ regulated services and QWR, a declaration affirming the accuracy and completeness of the evidence, and, where relevant, a statement that this is their first fee-paying year

Regulations relating to the notification requirements were then laid and came into force in September 2025 and the regulations for determining the QWR came into force in October 2025. The Secretary of State wrote to Ofcom in November 2025 to agree with their recommendation that the QWR threshold should be set at £250m and with their proposals for exempt services; she then laid the regulations in Parliament to bring this into effect, which came into force in December 2025. Ofcom’s statement and guidance on QWR and notification was published in November 2025, following a further consultation on both issues.

Ofcom then consulted on its Statement of Charging Principles between November 2025 and January 2026, with the final statement published in March 2026 setting out “details relating to the computation model used to calculate fees payable”, along with details on the meaning of QWR and the threshold figure contained in the corresponding regulations. Summary details on how the fees are calculated can be found here.

2026/27: initial charging year

The fees and charging regime is now in force, with 2026/27 designated as the initial charging year. Regulated services had four months between December 2025 and 11 April 2026 to notify Ofcom if they invoices due to be issued in September 2026.

The notification period for the next charging year (2027/28) is now open until September and for next year, and subsequent years, invoices are expected to be issued in the April of each year. Providers who notified Ofcom for the initial 26/27 charging year will receive a request for information asking for QWR details and evidence for 27/28 charging year.