Amazon seller accounting in the UK: one settlement, booked line by line
An Amazon payout is not your sales figure. This guide books one made up settlement line by line: sales, refunds, fees, VAT and reserve. A payout is what is left after all of those, so booking it as income understates both your turnover and your costs. It is general information, not advice on your own tax position.
The settlement
A UK VAT registered company holds its stock in the UK and sells to UK customers at £24.00 including VAT. All figures are made up. The fee VAT shown here is an assumption: book what your own Amazon fee invoice says.
| Line | Before VAT | VAT | Total |
|---|---|---|---|
| 100 units sold | £2,000.00 | £400.00 | £2,400.00 |
| 5 units refunded | -£100.00 | -£20.00 | -£120.00 |
| Selling fees | -£300.00 | -£60.00 | -£360.00 |
| Fulfilment fees | -£250.00 | -£50.00 | -£300.00 |
| Advertising | -£100.00 | -£20.00 | -£120.00 |
| Subtotal | £1,500.00 | ||
| Reserve kept by Amazon | -£200.00 | ||
| Paid to your bank | £1,300.00 |
The entry
One journal explains the whole payout. Debits and credits both come to £2,280.00.
| Account | Debit | Credit |
|---|---|---|
| Bank | £1,300.00 | |
| Amazon reserve (money Amazon still holds) | £200.00 | |
| Selling fees | £300.00 | |
| Fulfilment fees | £250.00 | |
| Advertising | £100.00 | |
| VAT on fees (input VAT) | £130.00 | |
| Sales, less refunds | £1,900.00 | |
| VAT on sales (output VAT) | £380.00 |
The reserve is an asset, not a cost. It comes back in a later settlement, when the same account is credited.
Cost of goods is a second entry. If each unit cost £6.00, the 95 units kept by customers move £570.00 from stock to cost of goods. The profit from this settlement is then £1,900.00 less £570.00 less £650.00 of fees and advertising: £680.00.
What goes wrong if you book the payout
| Figure | Booked from the payout | Correct |
|---|---|---|
| Sales | £1,300.00 | £1,900.00 |
| Fees and advertising | nothing | £650.00 |
| VAT due on sales | not shown | £380.00 |
| VAT reclaimable on fees | not shown | £130.00 |
| Money Amazon holds | not shown | £200.00 |
The VAT return shows the damage first. HMRC's record keeping notice asks for the time of supply, the value excluding VAT and the rate for each supply you make. A payout total gives you none of these.
The £90,000 VAT threshold is at risk too. It looks at taxable turnover. A seller not yet registered who sells £96,000 in 12 months and receives £64,000 after fees may think they are well under the limit. They are over it. Our VAT guide for online sellers shows the test month by month.
Four things to check on your own settlement
- VAT on fees. Open the fee invoice and see who issued it and whether VAT was charged. Seller reports say Amazon moved to charging local VAT on fees from August 2024; we could not read Amazon's own page without a seller login, so go by the invoice.
- Who owes the VAT on the sale. For a UK established seller, the sale is normally yours to account for. For an overseas seller with goods in the UK at the point of sale, the marketplace is liable. Booking it as your own output VAT then overstates what you owe.
- Settlements across a month or quarter end. A settlement can start in March and pay out in April. Date the sales by when they happened, not by the payout, or your VAT quarter takes the wrong sales.
- What Amazon tells HMRC. Platforms report sellers' details and income to HMRC each January, unless a seller makes fewer than 30 sales and receives under 2,000 euros (about £1,700) in the year. You should get a copy. Compare it with your books and be able to explain any difference. Being reported does not by itself mean tax is due.
Keep the files
Download each settlement report and fee invoice. VAT records must be kept for at least 6 years (VAT Notice 700/21). Rows you do not recognise, such as a new fee type, need a look before they are booked. Do not park them in a general cost account.
How Octobooks handles it
Octobooks has a connector tool to put an Amazon settlement forward as one journal, with the payout as its other side, and the bank line is then matched against it. A row with no known meaning goes to review and is not booked silently. Who releases the journal is your choice, on the page Control. Your VAT return figures come from those entries, and you submit the return yourself: direct filing is not switched on yet. On Solo and Starter the shop link is an add on, £15 a month per shop (pricing).
Keep going
- UK Amazon and Shopify fee and VAT calculator: what is left per unit
- Shopify payouts: booking one week and the month end
- VAT for UK online sellers: who owes what, and when to register
- Who pays if AI gets my VAT return wrong?
- Free UK invoice template
Sources: GOV.UK: VAT Notice 700/21, GOV.UK: VAT and overseas goods sold through online marketplaces, GOV.UK: selling on a digital platform, GOV.UK: when to register for VAT. All seen 4 November 2026.