Chart of Accounts for a UK Amazon Seller (Template)

Your Amazon settlement report is a wall of numbers: sales, FBA fees, referral fees, storage, advertising, refunds, reserves, currency conversions. If all of that lands in your books as one lump called "Amazon", you can't see your real margin, your VAT is a guess, and your year-end accounts take twice as long.

A good chart of accounts fixes that. It's just the list of "buckets" your bookkeeping software uses to sort every pound that moves through the business. Get it right once, map your Amazon payouts to it, and your numbers tell you the truth every month.

This guide is for UK sole traders and limited companies selling on Amazon, including FBA. You'll get a ready-to-use chart of accounts template, the accounts an Amazon seller actually needs, and clear guidance on the tricky bits: splitting out Amazon fees, handling VAT on those fees, and tracking cost of goods sold (COGS) so your gross margin is real.

All tax figures below are for the 2025/26 tax year and are linked to the relevant gov.uk guidance in Sources.

What is a chart of accounts, and why do Amazon sellers need a specific one?

A chart of accounts is the master list of categories your accounting software uses to record income, expenses, assets and liabilities. For an Amazon seller, a generic template hides the two things that decide whether you're profitable: your true product cost and the fees Amazon takes before you ever see the cash.

Amazon doesn't pay you per sale. It nets everything off and pays a lump sum every couple of weeks. So a useful chart of accounts has to be able to "un-net" that payout into its parts: gross sales, refunds, each fee type, advertising, and the VAT element. Without that, your turnover is understated and your costs are invisible.

How is an Amazon payout actually made up?

A single Amazon disbursement usually bundles together:

• Product sales (your gross revenue).
• Refunds and returns issued to customers.
• Referral fees (Amazon's commission, typically a percentage of the sale).
• FBA fulfilment fees (pick, pack and ship).
• FBA storage fees (monthly and long-term).
• Advertising spend (Sponsored Products and similar).
• Reimbursements (for lost or damaged FBA stock).
• Reserve movements (cash Amazon holds back and later releases).

If you book the net payout as income, your profit and loss is wrong from the first line. The chart of accounts below gives each of these its own home.

What accounts does a UK Amazon seller need?

The short answer: gross sales as income, every Amazon fee type as its own expense, a dedicated cost of goods sold section, and the right VAT and balance-sheet accounts so imports and reserves are handled cleanly.

Here's the structure, grouped the way your accounts will be presented at year-end.

Income accounts

Keeping refunds in their own account, rather than just reducing sales, means you can see your return rate at a glance.

Cost of goods sold (COGS)

COGS is the single biggest driver of your gross margin. Inbound freight and import duty belong here, not in overheads, because they're a cost of getting your product ready to sell.

Amazon selling fees (split, never lumped)

Marketing and operating overheads

VAT and balance-sheet accounts

The "Amazon reserve / clearing" account is the unsung hero. Amazon often holds a reserve, so the cash you receive in a period rarely matches the sales in that period. Posting the difference to a clearing account keeps your bank reconciliation clean.

How should you record Amazon fees in your accounts?

Record each fee type to its own expense account, gross of VAT, and handle the VAT separately. Lumping all fees into one "Amazon" line is the most common mistake we see, and it makes margin analysis impossible.

The cleanest method is to use the Amazon settlement report (or a tool that reads it) to post a summary journal for each settlement period. One journal can capture gross sales, refunds, each fee category and advertising in a single entry that ties back to the cash Amazon actually paid you.

Illustrative example: posting a settlement

Priya runs a limited company selling kitchenware via Amazon FBA and is VAT registered. Her two-week settlement report shows:

The summary journal records gross sales of £10,000 as income, £600 as refunds, and each fee and advertising line to its own expense account. The fees and advertising total £3,160, refunds are £600, so the cash out of sales is £6,840. With £600 of refunds already netted, the disbursement reconciles to £6,240 (£10,000 gross less £600 refunds less £3,160 fees and advertising). Every line now sits in the right account, and the £6,240 matches the bank.

Booking only the £6,240 would have understated turnover by £3,760 and hidden every cost. That matters for VAT, for your VAT registration check (the £90,000 threshold for 2025/26 is measured on gross taxable turnover, not net cash), and for knowing your real margin.

How does VAT work on Amazon fees for a UK seller?

For a UK-established, VAT-registered seller, Amazon's selling fees are generally supplied from outside the UK, so the reverse charge applies: you account for the VAT yourself rather than Amazon charging it.

Under the reverse charge for services bought from abroad, you act as both supplier and customer. You charge yourself output VAT on the fee value and, subject to the normal rules, reclaim the same amount as input tax. In most cases the two cancel out. You put the VAT figure in box 1 of your VAT return and the same figure in box 4, with the net value of the fees in boxes 6 and 7.

This is why your chart of accounts needs a tidy VAT control account and why fees should be recorded at their net value with VAT handled in the journal, not buried in the expense.

What about VAT on your Amazon sales?

If you're UK-established and VAT registered, you account for VAT on your UK sales in the normal way. The position changes for overseas sellers and for low-value imported goods, which is where Amazon's own VAT-collection rules bite.

Since 1 January 2021, for consignments of goods valued at £135 or less that are outside the UK at the point of sale and sold to customers in Great Britain through an online marketplace, the marketplace (Amazon) is liable for the supply VAT and charges it at the point of sale. For goods that are already in the UK at the point of sale but sold by an overseas seller, the overseas seller is treated as making a zero-rated "deemed supply" to Amazon, and Amazon accounts for the VAT to the customer. A UK-established business storing its own stock in the UK falls outside that deemed-supply mechanism and accounts for VAT on its sales itself.

The £135 limit applies to the value of the whole consignment that is imported, not to individual items within it.

How do you handle import VAT and duty in your books?

If you import stock, the cleanest route is postponed VAT accounting (PVA), which lets you declare and recover import VAT on the same VAT return instead of paying it at the border.

You don't need approval to use PVA. You include your VAT registration number on the import declaration, then use your monthly postponed import VAT statement to account for the import VAT on your return. Import duty, by contrast, is a real cost with no recovery, so it belongs in your COGS under inbound freight and duty.

This is why the template above has a dedicated "Import VAT (PVA)" account. It keeps the postponed VAT visible and stops import duty from being mistaken for recoverable VAT.

If you're scaling an FBA brand and want this mapped properly from day one, our accounting service for Amazon FBA sellers sets up the chart of accounts, the settlement journals and the VAT treatment together.

Should an Amazon seller use cash basis or traditional accounting?

If you trade through a limited company, you must use traditional (accruals) accounting. If you're a sole trader, you can choose, but for a stock-based Amazon business, traditional accounting usually gives a truer picture.

From the 2024/25 tax year, cash basis is the default method for eligible sole traders and partnerships, and the previous turnover entry and exit limits were removed. Limited companies, limited liability partnerships and partnerships with corporate partners cannot use cash basis at all.

Even where cash basis is allowed, an Amazon seller carrying inventory often gets a clearer margin from traditional accounting, because it matches stock costs to the period the goods are sold rather than when cash moves. Stock sitting in an FBA warehouse is an asset, not an expense, until it sells.

Do Amazon sellers need to worry about Making Tax Digital?

Yes. If you're VAT registered, Making Tax Digital (MTD) for VAT already applies: you must keep digital records and file your returns through compatible software. A well-structured chart of accounts is what makes that automatic rather than painful.

MTD for Income Tax is arriving in phases for sole traders and landlords, starting from 6 April 2026 for those with qualifying income over £50,000 (based on the 2024/25 year), then over £30,000 from April 2027, and over £20,000 from April 2028. Getting your bookkeeping clean now means MTD is a non-event when it reaches you.

Can you claim for equipment and assets?

Yes. Larger items like a label printer, packing station or computer can usually be claimed under the Annual Investment Allowance, which gives 100% relief on most plant and machinery up to £1,000,000 in the period. These belong in fixed assets on your balance sheet, not in COGS, which is another reason the template separates asset accounts from expenses.

A worked chart of accounts template you can copy

Here's the full template in one place, ready to recreate in your bookkeeping software. Codes are a suggestion; use whatever numbering your software prefers.

Key takeaways

• Never book the net Amazon payout as income. Un-net it into gross sales, refunds and each fee type.
• Give every Amazon fee its own account so you can see true margin.
• Put inbound freight and import duty in COGS, not overheads.
• Use the reverse charge for Amazon's overseas selling fees (box 1 and box 4) and PVA for import VAT.
• Limited companies must use traditional accounting; stock-based sole traders usually should too.

FAQs

Talk to an e-commerce accountant →