Amazon FBA Seller Tax in the UK — Income Tax, VAT and Stock in 2026/27
Amazon FBA sellers face specific tax questions around stock valuation, VAT on fulfilment fees and the £90,000 threshold. A practical UK guide for 2026/27.
Profit, Not Turnover, Is What's Taxed
A foundational point that trips up some new FBA sellers: Income Tax (as a sole trader) or Corporation Tax (as a limited company) is calculated on your taxable profit — total sales revenue minus the cost of goods sold, Amazon's various fees, advertising spend and other allowable business expenses — not on your gross sales figure. A seller with £100,000 in sales but £85,000 in combined product costs and fees has a taxable profit of roughly £15,000, which is what tax is actually calculated against.
Amazon Fees as Allowable Expenses
| Fee type | Generally allowable? |
|---|---|
| Referral fees (percentage of each sale) | Yes |
| FBA fulfilment fees | Yes |
| Storage fees | Yes |
| Amazon PPC advertising spend | Yes |
| Amazon subscription (Professional selling plan) | Yes |
Amazon's Seller Central reporting provides detailed, itemised breakdowns of all these fees, which is by far the most efficient source for compiling accurate expense records rather than trying to reconstruct fees manually.
Stock Valuation: A Timing Issue, Not a Permanent Loss of Relief
Unsold inventory at the end of an accounting period is not treated as an immediate expense — its cost is carried forward as a balance sheet asset and only becomes tax-deductible in the period the stock is actually sold. This is purely a timing rule (the cost is not permanently lost, just deferred), but it has real cash flow implications: a seller who spends heavily on stock ahead of a busy sales period (build-up for Q4, for example) has spent the cash but does not get the corresponding tax relief until that stock actually sells, which can be a meaningful mismatch to plan around.
VAT: More Complex for Cross-Border FBA
Standard UK VAT rules (the £90,000 threshold, assessed on UK taxable turnover) apply to a straightforward UK-only FBA operation the same as any other business. Sellers using Amazon's Pan-European FBA programme, where stock may be stored in warehouses across multiple EU countries to serve EU customers, can trigger VAT registration requirements in those individual countries based on local rules, entirely separate from the UK position. This cross-border complexity is genuinely one of the more involved areas of e-commerce tax and warrants specific professional advice for any seller operating (or considering operating) this way.
Keeping Records That Actually Work
Given the volume and granularity of Amazon's fee structure, downloading and reconciling Amazon's own monthly transaction and fee reports against your accounting records — rather than relying on bank statement totals alone — is the most reliable way to arrive at an accurate profit figure for tax purposes.
Use the calculator below to estimate the tax due on your FBA business profit for the 2026/27 tax year.
Frequently asked questions
Do Amazon FBA sellers pay tax on turnover or profit?
Income Tax (for sole traders) or Corporation Tax (for limited companies) is due on profit — turnover (total sales) minus allowable business expenses, including the cost of goods sold, Amazon's referral and FBA fulfilment fees, advertising spend, and other genuine business costs — not on gross sales turnover itself. Turnover is, however, the relevant figure for checking against the £90,000 VAT registration threshold.
Can I deduct Amazon's fees from my taxable income?
Yes — Amazon's referral fees, FBA fulfilment fees, storage fees and any advertising spend through Amazon's platform are all generally allowable business expenses, deducted from your gross sales revenue to arrive at taxable profit. Keeping Amazon's own monthly and annual transaction reports, which itemise these fees clearly, is the most efficient way to support this in your accounts.
How is stock (inventory) treated for tax purposes?
Unsold stock at the end of your accounting period is generally not an allowable expense in that period — it is valued and carried forward as an asset (inventory), with the cost only becoming an allowable expense in the period the stock is actually sold. This means a large stock purchase near your accounting year end can create a mismatch between cash spent and tax relief received, since the cost isn't deductible until the goods sell, which is an important cash flow planning point for FBA sellers scaling up inventory ahead of a busy season.
Do I need to register for VAT if I use Fulfilment by Amazon and Amazon stores my goods in an EU warehouse?
This can trigger additional VAT registration obligations in the country where goods are stored, separate from your UK VAT position, particularly if you sell to EU consumers using Amazon's Pan-European FBA programme. This is a genuinely complex area involving both UK and potentially multiple EU countries' VAT rules — sellers using cross-border FBA storage should take specific advice rather than assuming UK VAT rules alone cover their full position.
Try the calculators
VAT Calculator
Add or remove VAT from any amount. Supports 20%, 5% and 0% UK VAT rates.
Self-Employed Tax Calculator
Calculate income tax, Class 2 and Class 4 National Insurance for self-employed and sole traders for 2025/26.
Corporation Tax Calculator
Calculate Corporation Tax for UK limited companies for 2025/26.
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