Online Safety Act: Ofcom publishes policy statement on fees and penalties
On 26 June 2025, Ofcom published its policy statement, setting out its final decisions on how it will implement the fees and penalties regime under the Online Safety Act (the “OSA”). This follows a consultation process that ran from October 2024 to January 2025. The statement outlines how Ofcom will define Qualified Worldwide Revenue (“QWR”) which is used for the calculation of fees and also to calculate the maximum penalty that Ofcom can impose for breaches of the OSA, set thresholds for fee liability and apply exemptions and penalties.
Definition of QWR
Under the OSA, a provider’s QWR will be used to determine liability to pay fees as well as maximum penalties. In its statement, Ofcom notes it will define QWR:
- “as the total amount of revenue the provider receives that is referable to relevant parts of a regulated service” anywhere in the world. The “relevant parts” means (i) the parts on which regulated user-generated content may be encountered; (ii) the parts on which search content may be encountered; and (iii) the parts on which regulated provider pornographic content may be encountered. This means that providers will have to aggregate revenue from the relevant parts of all their regulated services for the purposes of calculating QWR. Ofcom’s view is that this will ensure that the fee will be proportionate if, for example, the relevant part of the regulated service is relatively small compared to the overall service, which may also lead to a more stable fee regime;
- by reference to worldwide revenue. This reflects Ofcom’s concern that, without this approach, the penalty cap for the largest providers within the scope of the OSA could be too low and, therefore, not be an effective deterrent. For smaller services, the maximum penalty cap of £18 million would continue to apply. Ofcom also stressed that the QWR figure is only used to calculate the maximum level of penalty, and that all circumstances of the case would be considered to ensure the penalty imposed is appropriate and proportionate;
- as including referable revenue for all a provider’s regulated services rather than a subset of those services;
- as including referable revenues which are received by other group undertakings to account for the range of business structures and accounting arrangements that may apply to providers; and
- in GBP. Where revenues need to be converted, a just and reasonable exchange rate must be used.
The qualifying period for determining QWR will be the calendar year two years prior to the calendar year within which the charging year begins.
If revenue arising in connection with relevant parts of regulated services cannot be separately identified from revenue arising in connection with other parts of those services, providers must apportion revenues using a just and reasonable approach. On 18 July 2025, Ofcom published draft guidance setting out the methods providers should use to apportion revenues and guiding principles they should consider when determining their QWR. Ofcom will be consulting on such guidance until 10 September 2025.
Joint and Several Liability for Penalties
If Ofcom finds that a provider and one or more of its group undertakings is jointly and severally liable for non-compliance, it will define the QWR as the total worldwide revenue of the provider and its group undertakings in the most recent complete accounting period, regardless of whether that revenue is referable to a regulated service.
QWR threshold
Ofcom will be advising the Secretary of State to set a QWR threshold figure of £250 million, but will also consider any threshold figure between £200 and £500 million as appropriate. Providers of regulated services above this figure will be required to pay a fee to Ofcom.
This recommendation has been made based on the threshold Ofcom feels would reduce compliance burdens and administrative complexity whilst ensuring fees are paid by a reasonable number and range of providers.
Exemption from the online safety regime
Under the OSA, Ofcom may exempt certain providers from the requirement to notify their QWR to Ofcom or pay fees. If approved by the Secretary of State, Ofcom proposes to exempt providers whose UK referable revenue is less than £10 million in a qualifying period. This is because it does not consider it proportionate that such providers would have the same liability to pay fees as those with a relatively large UK presence.
Ofcom will update its website once confirmation is received from the Secretary of State regarding the approval of this exemption.
Approach to statement of charging principles
Ofcom will be calculating fees based solely on a provider’s QWR and will not consider other factors. Each provider will be liable to pay fees based on a percentage of their QWR. The exact percentage will be set out each year in Ofcom’s tariff tables and calculated based on its annual costs of regulating online safety, divided by the total QWR of all providers liable to pay fees in that charging year. At the moment, Ofcom expects the tariff to be around 0.02 and 0.03% of each fee-paying provider’s QWR.
Ofcom intends to consult further on fees, the setting of tariffs and invoicing in a consultation in Q4 2025.
Notification
Ofcom will be retaining its Notification Regulations under section 85(2) of the OSA[1] in the form consulted on in October 2024. However, it will amend the accompanying Manner of Notification document to include additional detail on how providers liable for fees must submit their notifications.
In Q3 2025, Ofcom expects to publish a consultation on additional guidance providing further details on the notification process and required documentation.
Next steps
The Secretary of State will now consider Ofcom’s proposals regarding the QWR threshold and exemption. Regulations setting out how providers should determine their QWR were laid before Parliament on 26 June and, if approved by Parliament, are expected to come into force in Q4 2025. Once in force, applicable providers will be required to submit QWR notifications to Ofcom within four months. This is expected to be Q4 2025 – Q2 2026. Following Ofcom’s verification of the providers’ QWR, the first invoices are expected to be issued in Q3 2026.
For more detailed information, please visit the Ofcom website and for a broader outlook on the OSA in 2025, you can read more in this Law-Now article. If you are keen to find out more about the OSA, please contact one of the CMS team.
Co-authored by Lisa Franco, Trainee Solicitor at CMS.
