From 15 April 2026, Amazon deducts your Sponsored Products, Sponsored Brands and Sponsored Display advertising spend directly from your sales proceeds (your disbursement), instead of charging a card. Your payout is now net of referral fees, FBA fees, VAT (if you use Amazon's VAT Calculation Service) and ad spend. For your accounts, you must still record gross sales as turnover and advertising as a separate, allowable marketing expense — never net them off.
This is an operational change, not a tax change, but it quietly affects three things at once: how much cash actually lands in your bank, how you reconcile your settlement reports, and how easy it is to accidentally understate both your turnover and your ad spend. Below is exactly what changes and how to handle it cleanly.
What is actually changing on 15 April 2026?
If you previously paid for Amazon Ads with a credit or debit card, that card is no longer charged. Instead, Amazon takes the advertising cost out of the money it owes you from sales before it pays you. Functionally, advertising joins the queue of deductions that were already coming off your disbursement:
- Referral fees — Amazon's commission on each sale.
- FBA fees — fulfilment, storage and any surcharges.
- VAT — only if you use Amazon's VAT Calculation Service (VCS), where output VAT on the sale is shown and remitted via the settlement.
- Advertising — new from 15 April 2026.
The headline sale price hasn't changed. What's changed is that more money is being withheld before it reaches you, so the cash that funds your next inventory order is smaller and harder to predict.
How a net disbursement is now built up
Think of every settlement as a stack of subtractions from your gross sales. The figure that hits your bank is whatever survives at the bottom:
Gross sales − returns/refunds − referral fees − FBA fees − VAT (if VCS) − advertising = net disbursement
The problem for bookkeeping is that the bank only ever sees that final number. If you book the bank deposit as your "sales", you will understate turnover by every fee above — and now by your entire ad spend too. That matters for the VAT threshold (taxable turnover is measured on gross sales, not net of fees), for your profit, and for the tax-deductibility of the advertising you paid for.
Worked example: booking one settlement correctly
Say a UK FBA seller (VAT-registered, not on VCS for simplicity) has a two-week settlement that looks like this:
| Line | Amount |
|---|---|
| Gross product sales | £10,000.00 |
| Refunds to customers | −£400.00 |
| Referral fees | −£1,440.00 |
| FBA fulfilment & storage fees | −£1,100.00 |
| Advertising (Sponsored Ads) (new deduction) | −£900.00 |
| Net disbursement to bank | £6,160.00 |
Only £6,160 reaches your account, but your books must show the full picture. The correct journal (using a clearing account that the bank deposit later clears against) is:
- Turnover (Sales): credit £10,000 — the gross figure, before any deduction.
- Refunds/returns: debit £400 (contra-sales).
- Selling fees (referral): debit £1,440.
- FBA/fulfilment fees: debit £1,100.
- Advertising & marketing: debit £900 — a separate expense line.
- Bank / Amazon clearing account: debit £6,160 (the cash you actually received).
Notice that turnover is £10,000, not £6,160 and not £9,100. The £900 of advertising is shown in full as a marketing cost. If you simply booked "£6,160 sales", you would understate turnover by £3,840 and make your £900 of allowable advertising vanish — losing the deduction and distorting every ratio you rely on.
For the mechanics of setting up that clearing account in your software, see our guides on the Amazon settlement account in Xero and the Amazon clearing account in QuickBooks.
Why is my disbursement smaller and harder to predict?
Two reasons. First, the absolute amount withheld is bigger — advertising used to be a separate card charge sitting outside the settlement; now it eats into the same pot. Second, ad spend is variable and timing-sensitive. A campaign that ran hot during a promotion can pull hundreds of pounds out of a single disbursement, so the cash that funds your next stock order swings around far more than it used to.
If you run tight on working capital, this is the real risk: you reorder inventory based on what usually lands, the ad deduction is heavier than expected, and the disbursement comes up short. That's a cashflow-management problem, not an accounting one — and it's why a buffer matters (more below).
How to reconstruct the gross figures
You can't trust the bank deposit to tell you what happened. To rebuild the gross numbers each period:
- Download the settlement/disbursement report (the transaction-level summary of the period that paid out).
- Download the monthly advertising report (or the advertising invoices/transaction report) so you have the exact ad spend Amazon withheld.
- Reconcile the two: the advertising total on the ad report should equal the advertising deduction shown in the settlement for the same window.
- Confirm that gross sales − all deductions (including ad spend) = the net amount that hit your bank. If it ties out to the penny, your turnover and your expenses are both captured.
This reconciliation is the single most important habit. Done monthly, it keeps turnover honest for the £90,000 VAT registration threshold (taxable turnover is the rolling 12-month gross, per HMRC), keeps your advertising deduction intact, and stops fees and ad spend silently disappearing. Our deeper walkthrough on using the Amazon settlement report to find true turnover covers the gross-vs-net trap in detail.
The correct accounting treatment — never net it off
The rule is simple and non-negotiable: gross sales are turnover; advertising is a separate marketing expense. Advertising is a normal cost of running the business and is an allowable deduction for tax — but only if it appears in your accounts as an expense. Netting it against sales hides it, and a hidden cost is a cost you can't deduct cleanly or defend if HMRC asks.
For a limited company, advertising reduces taxable profit, which is charged at the 19% small-profits rate (profits up to £50,000), the 25% main rate (profits from £250,000), with marginal relief between. For a sole trader, it reduces the profit your income tax and Class 4 National Insurance are calculated on. Either way, booking it gross-and-separate is what makes the deduction real. See our list of Amazon seller allowable expenses for what else qualifies.
What's the VAT position on Amazon advertising fees?
For UK-established sellers, Amazon's advertising service is supplied from its UK entity, so advertising invoices typically carry UK VAT at 20%. If you are VAT-registered, that input VAT is recoverable on your VAT return in the normal way (subject to the usual business-use rules), so the advertising cost reduces both your profit and your VAT bill.
The mechanics shifted, not the VAT logic: even though the cash is now withheld from your disbursement rather than charged to a card, the advertising invoice is still a tax invoice. Keep the monthly advertising VAT invoices — they're your evidence for reclaiming the input VAT. If you're below the £90,000 threshold and not registered, you simply can't reclaim it, and the gross ad cost is your expense.
Practical cashflow tips for the new deduction
- Hold a buffer. Keep at least one full disbursement cycle of operating cash aside so a heavy ad period doesn't leave you short on a reorder.
- Forecast net, not gross. Build your inventory-purchasing forecast around the net disbursement you expect after ad spend, not the headline sales.
- Watch ACoS and TACoS. Advertising Cost of Sales and Total ACoS tell you whether ad spend is profitable. Now that ads come straight out of cash, a runaway ACoS hits your bank immediately.
- Cap campaigns before peaks. Set sensible daily budgets ahead of Prime Day or Q4 so a single settlement isn't gutted by ad spend.
- Reconcile monthly, not yearly. The longer you leave it, the harder it is to untangle which deduction was which.
If working capital is tight, structured forecasting helps — our cash flow management service is built for exactly this kind of variable-payout business, and the ecommerce tax calculator gives you a quick profit-after-tax sense check.
Who does this affect, and what should you do first?
It affects any UK Amazon seller who runs Sponsored Ads and previously paid by card — FBA or merchant-fulfilled, sole trader or limited company. Your first three moves: (1) tell your bookkeeper or accountant the deduction is moving into the settlement; (2) make sure your software maps the advertising line to a marketing expense, not against sales; (3) start the monthly settlement-plus-advertising reconciliation if you don't already. Sellers running on the FBA model should pair this with proper landed-cost and stock tracking so the whole picture stays accurate.
Frequently asked questions
Does Amazon deducting ad costs from payouts reduce my taxable turnover?
No. Your turnover is your gross sales, before any Amazon deduction. The advertising is a separate allowable expense that reduces profit. Netting ad spend off sales would understate turnover — which matters for the £90,000 VAT registration threshold — and bury a deduction you're entitled to claim.
Can I reclaim VAT on Amazon advertising fees?
If you're VAT-registered and Amazon charges UK VAT (typically 20%) on the advertising, yes — you reclaim it as input VAT on your VAT return, subject to normal business-use rules. Keep the monthly advertising VAT invoices as evidence. If you're not VAT-registered, you can't reclaim it and the gross cost is simply an expense.
How do I find out exactly how much ad spend Amazon withheld?
Download the monthly advertising report (or advertising invoices) from Seller/Advertising Central and reconcile the total against the advertising deduction shown in your settlement/disbursement report for the same period. The two should match, and gross sales minus all deductions should equal the cash that reached your bank.
What happens to my cashflow now that ads come out of disbursements?
Your net payout shrinks and becomes harder to predict, because variable ad spend now reduces the same cash that funds your next stock order. Hold a buffer of at least one disbursement cycle, forecast on net rather than gross sales, and watch your ACoS/TACoS so advertising stays profitable.
Get your Amazon bookkeeping set up correctly
If the new deduction has made your settlements harder to read — or you're not confident your turnover and ad spend are being captured gross — we can set up a clean reconciliation and clearing account so nothing slips. Book a free call with Zmartly and we'll review how your Amazon payouts are being booked.
