Every product sold on Amazon incurs multiple layers of fees. Some are fixed, some are percentage-based, and almost all of them are deducted directly from your settlements before the money reaches your bank. For ecommerce sellers scaling on Amazon UK, understanding how these fees work is not just a commercial decision. It directly affects how you report revenue, calculate VAT, and structure your profit and loss.
Selling Plan Fees
Amazon offers two selling plans for UK sellers. The Individual plan charges £0.75 per item sold and suits sellers moving fewer than 35 units per month. The Professional plan costs £25 per month (excluding VAT) with no per-item listing fee, and unlocks bulk listing tools, advertising, eligibility for top placement on product pages, and API access and reporting. That last point matters more than it sounds: without a Professional plan, your accountant cannot connect to Seller Central through tools like A2X to pull the data they need.
Most established ecommerce businesses will be on the Professional plan. If you are still on the Individual plan and selling more than 35 items per month, you are overpaying and missing out on the added value of the professional plan.
Referral Fees
For every item sold, Amazon charges a referral fee as a percentage of the total sales price (including delivery and gift-wrap charges, but not VAT). Most categories fall between 8% and 15%, though some go higher (Amazon device accessories carry up to 45%). There is a minimum referral fee of £0.25 per item, so even very low-priced products generate a fee.
For 2026, Amazon reduced referral fees in several categories: clothing and accessories dropped to 12% for items between £15 and £20, home products dropped to 8% for items up to £20, and pet clothing, food, grocery, and vitamins dropped to 5% for items up to £10. The full referral fee schedule on Amazon Seller Central has the current rates by category.
Fulfilment Fees
Fulfilment fees depend on which method you use.
Fulfilment by Amazon (FBA)
With FBA, Amazon handles storage, picking, packing, shipping, and customer service. Fees are charged per unit based on size tier and weight. Amazon restructured its size tiers in 2025 and some products will have shifted tier, so check your current per-unit fees rather than relying on 2024 figures.
Products priced at £20 or below now qualify for Low-Price FBA (expanded from £10 in January 2026), reducing fulfilment fees by around £0.40 per unit in most categories.
Storage fees are charged monthly based on cubic footage occupied, with higher rates during Q4. Stock held beyond 241 days incurs an aged inventory surcharge. From April 2026, a 1.5% fuel and logistics surcharge applies to all UK FBA fulfilment fees.
Fulfilment by Merchant (FBM)
With FBM, the seller handles storage and shipping directly or through a third-party logistics provider. Amazon charges no fulfilment fees, but referral fees still apply at the same rates. For bulky or slow-moving products where FBA storage costs would accumulate, FBM can work out cheaper.
FBM listings do not carry the Prime badge by default. Seller Fulfilled Prime (SFP) exists as a route to Prime visibility without FBA, but the requirements are steep: same-day dispatch, 99% on-time delivery, weekend shipping, and near-total use of Amazon Buy Shipping. In practice, most sellers choose FBA specifically because the Prime badge drives conversion, and SFP is not a realistic alternative for the majority.
Other Fees to Be Aware of
- Closing fees apply to media items (books, DVDs, video games, music, software). The closing fee is £0.50 per unit for most media categories and £1.00 for books.
- Advertising costs are separate from selling fees. If you run Sponsored Products, Sponsored Brands, or Sponsored Display campaigns, you pay per click. Advertising spend is increasingly deducted from your settlements too. Amazon is in the process of moving sellers from separate invoicing to settlement-based deductions for ad spend. Some sellers are already on the new model, others are still being transitioned. Either way, ad costs need to be tracked and categorised correctly, because once they are coming out of settlements, they further widen the gap between gross revenue and the amount that lands in your bank.
- Refund administration fees apply when Amazon processes a customer return. Amazon refunds the referral fee to you, minus an administration fee.
- High-volume listing fees apply to sellers with more than 2 million active non-media ASINs that were created over 12 months ago and have not had a sale from any seller in the past 12 months. A fee of £0.0003 per ASIN above the threshold is charged monthly. This is unlikely to affect most sellers but worth knowing if you carry a very large catalogue.
- VAT on seller fees has applied since August 2024. For sales through Amazon.co.uk, Amazon now charges 20% UK VAT on referral fees, FBA fees, storage fees, and advertising fees for UK-established sellers. These VAT charges are deducted from your settlements alongside the fees themselves. If you are VAT-registered, you can reclaim this input VAT on your returns, but only if you are recording it correctly.
- Digital Services Tax (DST) is passed on by Amazon as a separate line item on your invoice. For sales through Amazon.co.uk, UK-established sellers pay a 2% digital services fee on selling and FBA fees. For sales into France, Italy, and Spain, the rate rises to 3%. If you sell across multiple Amazon European stores, this adds a layer of cost that is easy to overlook and needs to be categorised correctly in your accounts.
How Amazon Deducts Fees from Your Settlements
This is where the Amazon accounting gets critical.
Amazon does not invoice you for fees and then collect payment. It deducts every fee, including referral fees, FBA fees, advertising spend, refund adjustments, and VAT on fees, directly from your revenue before issuing a settlement. Settlements are typically paid fortnightly.
The amount that lands in your bank account is a net figure. It is not your revenue. It is what remains after Amazon has taken its share.
This creates two problems that catch sellers out repeatedly.
Problem one: understating revenue for VAT purposes.
The UK VAT registration threshold is £90,000 of taxable turnover on a rolling 12-month basis. Turnover means gross sales, not net settlements. A seller receiving £60,000 in settlements over 12 months may well have gross sales above £90,000 once fees, refunds, and VAT are added back. Monitoring the VAT threshold using settlement amounts will understate your position and can result in late registration, backdated VAT liabilities, and penalties from HMRC.
Problem two: filing incorrect VAT returns.
Whether or not you are VAT-registered, your accounts must reflect gross sales, not the net amount Amazon deposits. Posting settlement amounts as ‘sales’ in your accounting software understates your actual revenue and produces accounts that do not reflect the true performance of the business. Once VAT-registered, the consequences compound: your output VAT will be understated, your Box 6 figures will not reconcile to Amazon’s own reports, and you will be filing inaccurate returns under Making Tax Digital. Under Making Tax Digital, HMRC expects a clear digital trail from transaction to return. Settlement-based bookkeeping breaks that trail.
Problem three: using the wrong Amazon report as your baseline.
Do not use the sales dashboard in Seller Central as a reference point. It shows revenue before VAT and before refunds and is not an accounting figure. Business Reports, Transaction Reports, and Settlement Reports each produce different sales figures for the same period. The Settlement Report reflects actual money movement, but it cannot be used as your revenue figure. It needs to be broken apart so that gross sales, fees, refunds, VAT, and other deductions are each recorded in the right place in your accounts.
A2X connects to Seller Central and does this automatically, splitting each settlement into its component parts and posting gross revenue, fees, and VAT to the correct accounts in Xero. Without a tool like A2X, you are either doing this manually for every settlement cycle or posting net figures and hoping for the best — neither of which holds up under Making Tax Digital.
The VAT Implications of Amazon Selling Fees
Amazon’s fee structure creates VAT obligations that go beyond collecting tax on sales. Three areas catch sellers out.
Direct VAT vs the Reverse Charge on Amazon Fees
Since August 2024, Amazon has charged 20% UK VAT directly on most seller fees for UK-established sellers. Where VAT appears on the invoice, you reclaim it as input VAT on your return in the normal way.
The reverse charge still applies in some cases. Amazon invoices certain fees from its Luxembourg entity, and no UK VAT appears on those invoices. That does not mean no VAT is due. Under the reverse charge, a VAT-registered UK seller must declare VAT on these fees as both an output and an input on their return. The net cash effect is usually nil, but the declaration still has to happen. Skipping it means filing an incorrect return.
Each invoice needs checking to confirm which treatment applies. Getting this wrong in either direction — missing a reverse charge declaration, or double-counting VAT that Amazon has already charged — produces VAT returns that will not reconcile.
How Amazon Fees Affect Your VAT Registration Threshold
Reverse charge supplies count toward the £90,000 VAT registration threshold alongside sales revenue. A seller with £70,000 in gross sales and £25,000 in reverse-charge Amazon fees has a combined taxable turnover of £95,000, above the threshold, even though the fees are costs. Sellers who only monitor sales figures when assessing registration can cross the threshold without realising and face backdated liabilities from HMRC.
Settlements Are Not Revenue
Amazon settles fortnightly, depositing the net payout after deducting fees, refunds, and reserves. That net figure is not your revenue and should never be posted as “sales” in Xero. Doing so understates your VATable turnover and produces VAT returns that will not reconcile to Amazon’s own reports.
Record gross sales as revenue and each fee category as a separate expense.
Categorising Amazon Fees Correctly in Your Accounts
Not all Amazon fees belong in the same line of your P&L. Getting this wrong distorts your gross margin and makes it harder to understand where your money is going.
Inbound freight costs (shipping your stock from the factory or supplier to Amazon’s fulfilment centres) belong in cost of goods sold (COGS). These are direct costs of getting your product to the point of sale.
FBA fulfilment fees (the per-order pick, pack, and ship charges Amazon applies when a customer buys your product) are a selling expense. They are a cost of distributing your product, not a cost of acquiring or producing it.
Both of these are deducted from your Amazon settlements rather than billed separately, so it is easy to lump them together. Sellers who do this understate their COGS, overstate their gross margin, and end up with margin figures that swing unpredictably from month to month as the ratio of inbound freight to fulfilment fees shifts.
Referral fees are also a selling expense. Advertising spend sits in marketing. Storage fees can sit in either overheads or cost of sales depending on how your chart of accounts is structured, but they should be separated from fulfilment fees.
Tips for Managing Amazon Selling Fees
Managing Amazon fees is not just about cutting costs. It is about understanding where your margin goes and making sure your accounting reflects the full picture.
Use Amazon’s FBA Revenue Calculator before listing. A product that looks profitable on sale price alone often has margins eroded by referral fees, fulfilment costs, and storage. Build the full fee picture before committing to a listing.
Optimise packaging to reduce FBA fees. A small reduction in dimensions or weight can move a product into a cheaper size tier, saving £0.20 to £0.50 per unit. At volume, that adds up to thousands over a quarter.
Monitor inventory age. The aged inventory surcharge starts when goods arrive at the fulfilment centre, not when they sell. Stock beyond 241 days incurs up to £6.90 per cubic foot. Plan removals before the threshold hits.
Check Low-Price FBA eligibility. Products at £20 or under now qualify for reduced fulfilment fees in most categories (expanded January 2026). Review your ASINs regularly and consider repricing where a small reduction delivers a net saving.
Plan inventory for Q4. Storage fees rise from roughly £0.75 to £2.40 per cubic foot between October and December. Balance stock availability against the cost of holding unsold inventory during peak rates.
Review your selling plan. Above 34 units per month, the Professional plan at £25/month is cheaper than £0.75 per item. It also unlocks advertising and restricted categories.
Categorise fees correctly in Xero. A single “Amazon fees” line hides profitability and creates VAT errors. Inbound freight belongs in COGS. Fulfilment and referral fees are selling expenses. Advertising sits in marketing. Code them separately.
What Changes when You Sell on Amazon US
UK sellers expanding to Amazon.com face a separate fee structure. Referral fee percentages are set independently for the US marketplace and vary by category. FBA fulfilment fees are calculated in USD and based on US warehouse costs, which may be higher or lower than UK equivalents depending on product dimensions. Storage fee rates and seasonal surcharges also differ. You cannot assume your UK margin analysis will hold on the US store.
If you do not hold a US-domiciled bank account, Amazon converts your settlements to GBP before depositing them, and the conversion fee is typically around 1.5%. A USD account with a UK high street bank is not sufficient; Amazon requires a US-domiciled account for direct USD payouts. Whichever route you take, the conversion and any associated charges need to be recorded in your accounts. For UK limited companies, all US revenue must be reported in GBP, so exchange rate movements create gains or losses that affect reported ecommerce profit.
The accounting challenge is reconciliation across two marketplaces. You now have two sets of fortnightly settlements, in two currencies, with different fee structures, different tax treatments, and different timing. Both need to flow into one Xero file with gross revenue, fees, and taxes correctly separated and converted. Posting two sets of net settlements as “sales” without breaking them apart produces accounts that are unreliable for decisions, non-compliant for VAT, and unusable for due diligence if you look to exit.
For a full walkthrough of the operational, tax, and compliance steps involved in launching on Amazon US, see our guide: Selling on Amazon USA From the UK: What You Actually Need to Do.
What this Means for Scaling Sellers
Amazon’s fee structure is not static. Rates change annually, new surcharges appear (the 2026 fuel surcharge is one example), and category-level adjustments can shift your margins without any change in your product or pricing. Ecommerce sellers scaling from £500k toward £5m or £10m in revenue cannot afford to treat Amazon fees as a single line item.
The difference between accurate and approximate fee categorisation compounds across thousands of orders per month. Gross margin errors of even 2–3 percentage points can materially affect business valuations, lending applications, and strategic decisions about which products or channels to invest in.
If your accounts currently show a single “Amazon fees” line, or if you are posting net settlement amounts as revenue, your financial data is not giving you the information you need to make decisions. A specialist Amazon accountant can restructure your chart of accounts, automate the reconciliation process, and make sure your VAT position is accurate.
Elver E-Commerce Accountants works with scaling ecommerce brands selling across Amazon, Shopify, and other platforms. We handle the full accounting and VAT compliance picture, from settlement reconciliation through A2X and Xero to multi-channel reporting and cross-border tax. If you need an ecommerce accountant who understands how Amazon’s fees flow through your accounts, book a discovery call.
