Shopify Sellers accounting, handled.
Shopify Payments lands net of fees, refunds offset future payouts, and your VAT return needs the gross, most accountants get this wrong.
An accountant for Shopify sellers should understand the messy reality of running an e-commerce store: VAT that turns on at £90,000 of turnover, import VAT and duty on stock from overseas suppliers, the marketplace "deemed supplier" rules, Stripe and PayPal fees buried in your payouts, and now Making Tax Digital landing on the self-employed. Zmartly is an ACCA-qualified UK practice built for online sellers, you get a named accountant, fixed monthly pricing from £99, and replies within 72 hours, all on Xero, QuickBooks, FreeAgent or Sage. This page explains the specific tax rules that decide what a Shopify business actually keeps.
What we get right for shopify sellers.
- VAT registration at £90,000, and the trap of gross sales
- You must register for VAT once your taxable turnover passes £90,000 in any rolling 12 months (not your tax year), with deregistration available below £88,000. The figure that counts is your gross sales before Shopify, Stripe and PayPal deduct their fees, sellers regularly cross the line without realising because they look at the cash that lands in the bank, not the headline sales. Cross it and you owe 20% on standard-rated sales from the registration date whether or not you charged customers, so we monitor your rolling turnover and warn you before it bites.
- Import VAT and duty on every overseas consignment
- If you buy stock from China, the EU or anywhere outside the UK, import VAT (usually 20%) and potentially customs duty apply when goods enter the country. VAT-registered sellers should use postponed VAT accounting so you declare and reclaim the import VAT on the same return instead of paying it upfront at the border and waiting to recover it, a cash-flow swing that can run to thousands on a single container. We make sure your freight forwarder and courier are using your EORI number correctly.
- The marketplace 'deemed supplier' rules can shift VAT off you
- For goods in consignments of £135 or less imported and sold to UK consumers, and for any overseas-seller goods already in the UK at the point of sale, the online marketplace, not you, is liable to account for the VAT at the point of sale. If you sell on Amazon, eBay or Etsy alongside your own Shopify store, the VAT treatment differs by channel, and getting it wrong means either double-paying or under-declaring. We reconcile each sales channel separately so your VAT return reflects who actually owes the tax.
- MTD for Income Tax is now arriving for sole traders
- Making Tax Digital for Income Tax applies from April 2026 to sole traders and landlords with qualifying income over £50,000, from April 2027 above £30,000, and from April 2028 above £20,000. If your Shopify store is run as a sole trade and your income clears these thresholds, you'll keep digital records and file quarterly updates instead of one annual return. We get your bookkeeping MTD-ready now so the switch is a non-event rather than a scramble.
The full picture.
01Getting VAT right across your channels and OSS/IOSS
Your own Shopify checkout, Amazon, eBay, Etsy and TikTok Shop can each carry different VAT treatment, and selling into the EU adds the One Stop Shop (OSS) and Import One Stop Shop (IOSS) for low-value goods up to £135/€150. We register you for VAT when £90,000 demands it, choose between standard, cash or Flat Rate accounting, decide whether OSS/IOSS or local registration fits your EU volumes, and file MTD-compliant returns. The aim is one clean VAT position across every place you sell, not a patchwork that triggers HMRC queries.
02Reconciling Shopify, Stripe, PayPal and Klarna payouts
A Shopify payout is rarely one clean number, it nets off transaction fees, refunds, chargebacks, currency conversion and Klarna or Clearpay settlements before the cash reaches you. If you only record the bank deposit, your turnover is understated (a VAT-threshold risk) and your costs are hidden. We connect Xero, QuickBooks or FreeAgent to your gateways so gross sales, fees and refunds are each posted correctly, giving you real margin figures and a VAT return that ties back to source data.
03Claiming every legitimate e-commerce cost
Shopify and app subscriptions, payment processing fees, packaging and postage, product samples, paid ads, influencer fees, photography, returns and a proportion of home-office and mileage costs (55p per mile for the first 10,000 business miles, then 25p) are all deductible. There's a £1,000 trading allowance if your side-hustle store is genuinely small. For stock, you hold cost as inventory and only relieve it as cost of sales when items sell, a distinction that catches out sellers sitting on unsold stock at year end. We build your chart of accounts around how an e-commerce business actually spends.
04Sole trader vs limited company for your store
Below the higher-rate band, a sole trade is simpler and avoids Companies House filings; once profits are sustained and reinvested, a limited company often wins. Corporation Tax is 19% up to £50,000 of profit and 25% above £250,000, with a 26.5% marginal rate in between. Salary-plus-dividend planning matters too: the dividend allowance is just £500, with dividend tax at 10.75%/35.75%/39.35% above it. We model both routes on your real numbers before you incorporate, so the decision is evidence-based.
05Capital allowances on equipment and the 2026 changes
Cameras, lighting, packing machinery, computers and warehouse fit-out can be written off in full under the £1,000,000 Annual Investment Allowance, with full expensing also available on qualifying new main-rate plant. From April 2026 the main-pool writing-down allowance falls from 18% to 14%, and a new 40% first-year allowance applies to main-rate plant, timing a large purchase across that date can change your relief. We plan capital spend so you claim the most generous allowance available.
06Digital platform reporting, what HMRC already sees
Since January 2024, UK digital platforms must report seller income to HMRC, with the first reports due by 31 January 2026 covering the 2025 calendar year. That means marketplaces and apps you sell through are handing HMRC your sales data directly, and it must reconcile to what you declare. If you've been running an under-the-radar side store, the gap is now visible. We bring your filings in line with platform data and, where needed, make a clean disclosure before it becomes an enquiry.
First call to filed.
- 01
Discovery
Understanding your business needs.
- 02
Solution Design
Crafting your custom accounting strategy.
- 03
Onboarding
Quick and easy integration.
- 04
Regular Rhythm
Consistent monitoring and reporting.
Tax guides worth a read
Plain-English explainers, kept current with the latest HMRC rules.
Frequently asked questions.
When your taxable turnover passes £90,000 in any rolling 12-month period, measured on your gross sales before Shopify, Stripe or PayPal fees, not the cash that hits your bank. You can deregister if turnover falls below £88,000. We track your rolling figure and flag it before you cross, so you're never caught registering late and owing back-VAT you never charged.
Yes, import VAT (usually 20%) and potentially customs duty apply when goods enter the UK. If you're VAT-registered, postponed VAT accounting lets you declare and reclaim the import VAT on the same return rather than paying at the border and waiting to recover it, which protects your cash flow. You'll need a valid EORI number, and we make sure your courier or freight forwarder uses it correctly.
It depends on the goods. For imported consignments of £135 or less sold to UK consumers, and for overseas-seller stock already in the UK at the point of sale, the marketplace is liable to account for the VAT, not you. Goods sold through your own Shopify checkout are different: there the VAT is yours. We reconcile each channel separately so your return reflects who genuinely owes the tax on each sale.
At lower profits a sole trade is simpler and cheaper to run; once profits are sustained and you're reinvesting, a company is often more tax-efficient. Corporation Tax runs 19% up to £50,000 and 25% over £250,000, with a 26.5% marginal band between, and dividends are taxed at 10.75%/35.75%/39.35% above a £500 allowance. We model both on your actual figures so you incorporate for the right reasons, at the right time.
If you trade as a sole trader, yes. MTD for Income Tax starts in April 2026 for qualifying income over £50,000, April 2027 over £30,000, and April 2028 over £20,000. You'll keep digital records and file quarterly updates instead of one annual return. We move your bookkeeping onto MTD-ready software now so the change is seamless when your turn comes.
UK digital platforms have reported seller income to HMRC since January 2024, with the first reports due by 31 January 2026 for the 2025 year. So HMRC increasingly sees marketplace and app sales directly, and it should match your declared figures. If there's a gap, we help you reconcile and, where appropriate, make a tidy disclosure before it turns into an enquiry.
Fixed monthly pricing from £99, £199 or £499 depending on the support you need, on a rolling monthly basis with no long tie-in and a 30-day money-back guarantee. You get a qualified, named accountant, replies within 72 hours, and support on Xero, QuickBooks, FreeAgent or Sage. No surprise bills, the price covers the e-commerce VAT, bookkeeping and accounts work your store actually needs.
Stop overpaying tax. Start filing in 5 days.
Thirty minutes with an ACCA-qualified accountant. Most owners uncover £1,000-£3,000 in annual savings on the first call. If we are not the right fit, you walk away with a free tax review on the house.
