What tax implications do I need to consider as a UK Amazon seller?

Tax implications for UK Amazon sellers
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    As an Amazon seller in the UK, understanding your tax liability is crucial to the success of your business. We understand that starting out isn’t always easy, especially with the constant changes to UK tax laws.

    Whether you’re at the beginning of your Amazon selling journey or already have a fully established Amazon business, we’ll help you understand the tax implications so you can avoid costly errors and make smart tax savings.

    UK Amazon sellers should be aware of several taxes, which all depend on how they structure their business:

    • Income Tax for self-employed Amazon sellers
    • Corporation Tax for limited companies
    • VAT when your taxable turnover exceeds £85,000
    • National Insurance contributions

    At Archimedia Accounts, we are a family-run accountancy agency with over 30 years of tax and accounting experience. We’re looking to help business owners and entrepreneurs grow their finances, make significant tax savings, and comply with the complex tax rules.

    We understand the struggles many Amazon sellers face, and we’re here to help guide you through them. In this blog, our experts cover the key tax implications for Amazon sellers in the UK, including what taxes you should be aware of, how much tax you’ll have to pay, and the essential records you should keep to stay organised and compliant.

    Keep reading to understand your tax obligations as an Amazon seller, or contact us today to discuss how we can work together to make your Amazon business a success.

    What taxes does an Amazon seller have to pay?

    Like any other established business or sole trader, Amazon sellers must pay certain taxes based on their profits.

    Income tax

    If you’re a self-employed Amazon seller, then you’re required to pay Income Tax on your profits after all business expenses are deducted.

    The amount you pay will depend on which tax band you fall into, which currently (2024/25) are as follows:

    Tax RateTaxable Income
    0%Less than £12,570
    20%£12,571 to £50, 270
    40%£50,270 to £125,140
    45%Over £125,140

    Corporation Tax

    If you run your Amazon business as a limited company, you’ll need to pay Corporation Tax on your company’s profits. The current Corporation Tax rate starts as a flat rate of 19% (2024). Since the tax system is subject to changes, staying up-to-date with the latest corporate tax rates will help you stay compliant.

    VAT

    If your taxable turnover exceeds the VAT threshold in any 12 months or you expect it to in the next 30 days, then you must register for VAT. The VAT threshold is currently £90,000 (2024/25). As a VAT-registered business, you’re required to charge VAT on your sales, submit quarterly VAT returns and pay any VAT due.

    While there is a threshold for VAT, you can voluntarily register if you haven’t yet met this.

    National Insurance contributions

    As a self-employed Amazon seller, you’ll also be expected to pay National Insurance, depending on your profits.

    The current National Insurance rates (2024/25) are as follows:

    Class 4 NI RateProfits
    6%£12,570 to £50,270
    2%Over £50,270

    How much are Amazon sellers taxed?

    The amount of tax you must pay will vary depending on how much profit you make through your Amazon business and whether it accounts for all or part of your income. Your business structure and any relevant tax deductions will also affect the overall tax liability.

    Self-employed

    If you’re a self-employed Amazon seller, then you’ll pay income tax on your business profits according to your specific tax band. This depends on how much money you earn through Amazon and any other potential income.

    Limited company

    As a limited company, your primary tax liability is Corporation Tax, which is paid as a percentage of your Amazon business profits. However, if you’re a director, you may also be required to pay personal tax on your salary or dividends.

    How does the trading allowance affect Amazon seller tax?

    If you’re in full-time employment and earn money through Amazon as ‘miscellaneous’ income, then you may be eligible for the trading allowance to reduce the impact of tax. The trading allowance is a tax relief available to those in self-employment in the UK, including Amazon sellers. It provides sellers with a tax-free allowance of up to £1,000 per tax year.

    What records should an Amazon seller keep?

    Whether you’re running a large business or earning a little money on the side as an Amazon seller, it is crucial to keep a good record of your income and expenses.

    Some of the essential records you should maintain include:

    • Details of all sales transactions
    • Invoices and receipts for business expenses
    • Bank transactions
    • VAT records
    • Tax documents

    Keeping accurate and up-to-date business records allows you to monitor your income and spending. It not only enables you to manage compliance with ease but also helps you ensure positive cash flow and save tax.

    How can Archimedia Accounts help?

    We understand that tax implications can be confusing for Amazon sellers, especially if this is a new venture. This is why we have designed a service to ensure you stay at the top of your game when it comes to paying tax as an Amazon seller.

    Our comprehensive Amazon accountancy services offer tailored advice and expert guidance so you can save money and stay compliant with UK tax regulations.

    We’ll provide support with structuring your Amazon business in the most tax-efficient way, help you deduct all relevant allowable expenses and produce regular reports detailing any tax and VAT paid to HMRC. With us handling your Amazon tax obligations, you can focus on running and growing your Amazon business.

    Contact us today to learn how we can help you thrive as a UK Amazon seller.

    Frequently asked questions about tax implications for Amazon sellers

    Does Amazon collect VAT for sellers in the UK?

    Amazon offers a VAT service for UK-based sellers, which provides VAT guidance, registration support, and automated VAT filings.

    When do I need to submit a Self-Assessment tax return for Amazon sales?

    As a self-employed Amazon seller, you’ll need to register for Self-Assessment and pay tax like other self-employed individuals and sole traders. The deadline for submitting your Self-Assessment tax return is 31 October (following the tax year) for all paper returns or 31 January (following the tax year) for all online returns.

    How often does an Amazon seller need to pay tax?

    You’ll be expected to pay tax each year following your Self-Assessment tax return.

    Picture of Chris Demetriou

    Chris Demetriou

    Chris is Head of Business Advisory​ at Archimedia Accounts and is a specialist in tax. For more advice book a FREE consultation:

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