As one of the biggest online marketplace platforms in the world, Amazon can present a powerful opportunity for online sellers to get their products in front of customers. In this article we explain what your options are if you’re considering becoming an Amazon seller, and what this means for paying tax.
Do I have to pay to sell things on Amazon?
Yes, Amazon do collect fees from sellers, although the exact charging structure varies. There are two typical selling plans to choose from as a starting point:
- Individual: You won’t pay a subscription fee, but you will pay 75p each time you sell an item (so you’ll only be charged if you sell something)
- Professional: You’ll pay a flat subscription fee of £25 per month, no matter how many items you sell
Based on those rates, you might find it more cost effective to register for the Professional plan with its flat subscription fee if you expect to sell more than 35 items every month.
Amazon charges additional fees on top of the selling plan charges, so you might also need to pay both referral and closing fees if they apply. They can also deduct VAT from some of your sales – such as cross-border sales.
What are Amazon referral fees?
These are a bit like paying for membership to a club. You’ll be charged a percentage of each sale (including shipping and any extras such as wrapping) at the rate which applies to that category of product. Amazon publish a full list of referral fees on their dedicated page.
What are closing fees on Amazon?
Amazon charge sellers an additional fee of 50p per item on the sale of media products, such as video games, books, DVDs and games consoles.
Do I have to register as a business to sell on Amazon?
Not necessarily, but you may need to register for tax depending on how much you earn from selling online with Amazon (which we’ll explain next). If you’re already a registered business then you’ll need to supply all this information to Amazon when you sign up to become a seller.
Will I need to pay tax if I’m an Amazon seller?
The trading allowance means individuals can earn up to a total of £1,000 of ‘miscellaneous’ income (for instance, from casual self-employment) in a tax year before reporting this to HMRC. You’re entitled to the allowance alongside other types of income even if you also earn money from something else – such as working for an employer. You don’t get a separate one for each platform you sell on!
You might also need to register your business for VAT if your taxable turnover is more than the £90,000 registration threshold. Amazon will sometimes ask sellers to confirm their VAT status.
When Amazon will tell HMRC about sellers
Amazon (and other online selling platforms) are required to share information about you and your sales with HMRC if you:
- Make more than 30 sales in a year
- Earn more than €2,000 through the platform in a year
HMRC will collate information they receive from different sources, so don’t get caught out – especially if you sell under the threshold but on multiple platforms! The reporting thresholds which platforms like Amazon use are separate to the trading allowance too.
You’ll need to pay tax if you earn more than the trading allowance – even if your Amazon sales are just a side-hustle alongside other work.
Can I claim Amazon seller fees as an expense?
Yes, you can! Self-employed Amazon sellers in the UK pay tax on their profits, not the total amount they earn, so you can claim tax relief on your allowable expenses by deducting them from your earnings. Other allowable expenses you might be able to claim for as an Amazon seller include:
- Marketing costs
- Shipping charges
- Transaction fees
- Photography equipment
- Software subscriptions and licences, such as photo editing software
This list is by no means exhaustive so check with your accountant if you’re not sure – rather than potentially missing out on allowable expense claims!
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