WooPayments and Stripe payout reconciliation for UK stores

Your WooCommerce dashboard says you sold £12,000 this month. Your bank shows a payout of £11,592. Neither figure is your VAT-able sales, and if you book the wrong one you'll either over-claim, under-declare, or spend Saturday night unpicking it.

This is the single most common bookkeeping trap for self-hosted WooCommerce stores running WooPayments (which settles through Stripe under the bonnet). The gap between what you sold and what landed in the bank is fees, refunds, timing and reserves, and every one of those has its own accounting treatment.

This guide shows you how to reconcile a WooPayments or Stripe payout line by line, where the VAT actually sits, and the three errors we see most often in real WooCommerce books. It's written for UK stores on the standard VAT accounting basis.

Why doesn't my payout match my WooCommerce sales?

Because a payout is your sales after the payment processor has taken its cut, netted off refunds, and sometimes held back a reserve or pushed a sale into the next batch. The payout is a cash movement, not a sales figure, and your VAT is due on the sale, not on the cash.

WooPayments is WordPress's own payment product, but it settles through Stripe's infrastructure, so a WooPayments balance behaves like a Stripe balance. Money from card payments lands in your Stripe/WooPayments balance, then pays out to your bank on a schedule (often daily or weekly). The payout that hits your bank is a single rolled-up number covering many orders, minus what Stripe kept.

If you book that one bank figure as "sales", you've quietly understated your turnover by the fees and lost the VAT detail. That's the root of nearly every WooCommerce reconciliation headache.

What is a WooPayments payout actually made of?

Think of a payout as one net figure built from several moving parts. Pulling them apart is the whole job.

The key mental shift: gross sales is what you record as turnover and what VAT is calculated on. The fees, refunds and the rest are separate ledger entries. You don't get to the right answer by treating the bank deposit as your sales line.

Where does VAT sit, on gross sales or the net payout?

Your output VAT is due on the gross (VAT-inclusive) value of each sale, at the tax point of the supply, not on the smaller amount that reaches your bank.

Under standard VAT accounting you account for VAT by reference to the tax point (the time of supply), not the date the money lands. For goods, the basic tax point is when the goods are sent or made available, but if you take payment first, an earlier tax point is created at the date you receive payment. For most WooCommerce stores, payment is taken at checkout, so the tax point is usually the order/payment date. HMRC sets this out in the VAT guide (Notice 700).

That has two consequences:

1. You declare VAT on the full sale, before fees. A £120 standard-rated order is £100 net plus £20 VAT. You owe HMRC that £20, even though WooPayments might only pass on £116.50 after its fee. The fee does not reduce your output VAT.

2. Payment processing fees carry no input VAT to reclaim. Card processing and payment handling are generally treated as exempt financial services for UK VAT, so a WooPayments/Stripe fee normally has no UK VAT on it for you to recover. Always check the actual fee documentation, but as a rule you are not reclaiming 20% of your processing fees. The standard VAT rate is 20%.

The standard basis is sometimes called accrual accounting. If you're on the Cash Accounting Scheme instead (open to businesses with VAT taxable turnover of £1.35 million or less), you account for VAT when the customer pays rather than at the invoice date, but you still account on the gross sale, never on the net payout.

One more thing if you sell across borders: for VAT, all sale values must be converted into sterling, and any VAT due in the UK must be shown in sterling. HMRC lets you use the UK market selling rate at the time of supply or its published period rate of exchange. See Transactions in foreign currencies and VAT. Stripe will report a converted figure, but you remain responsible for the conversion basis in your records.

How do I reconcile a payout step by step?

The aim is to prove that every payout equals gross sales minus deductions, and that your sales ledger and VAT match the orders, not the bank.

1. Export the Stripe/WooPayments payout report for the period, with the per-transaction breakdown (gross, fee, net) and the payout ID.
2. Export the WooCommerce orders for the same window, including order total and tax.
3. Book gross sales to turnover, split by VAT rate, from the WooCommerce order data. This is your VAT-able sales figure.
4. Book fees as a separate expense ("payment processing fees"), with no input VAT recovered (see above).
5. Book refunds against sales, reversing the output VAT on the refunded portion in the period the refund is made.
6. Post the net payout to the bank, and confirm gross sales minus fees minus refunds minus any reserve equals the cash that arrived.
7. Carry the closing balance. Sales captured after the payout cut-off, plus any reserve, sit in the Stripe/WooPayments balance, not your bank. Reconcile that balance as a clearing account so nothing falls down the gap between months.

If your bookkeeping software pulls a single net deposit from the bank feed, do not let it categorise that as sales. Match it to the payout, then explode the payout into its parts.

HMRC's VAT record-keeping guidance (Notice 700/21) lets you record supplies at the same rate within a period as a single entry, so a daily or per-payout sales total split by VAT rate is acceptable, as long as it's supported by the underlying order data. VAT records must be kept for at least 6 years.

A worked illustrative example

Illustrative example. "Northgate Supplies", a fictional VAT-registered WooCommerce store on standard VAT accounting, has one calendar month of UK standard-rated sales through WooPayments. All sales are at the 20% standard rate. Figures are illustrative.

Splitting the sales for VAT:

• Gross sales £12,000.00 / 1.2 = £10,000.00 net, with £2,000.00 output VAT.
• The refund of £60.00 / 1.2 = £50.00 net, with £10.00 VAT to reverse.

So the output VAT due for the month is £2,000.00 less £10.00 = £1,990.00.

Now contrast that with the wrong-but-tempting shortcut of running VAT off the £11,592.00 that actually hit the bank:

• £11,592.00 / 1.2 = £9,660.00 net, implying only £1,932.00 of VAT.
• That understates output VAT by £58.00 for a single month, because the £348.00 of fees and the gross-vs-net refund timing have been swallowed.

Multiply a £58 monthly slip across a year and you have a real, avoidable VAT error, plus a turnover figure that is too low for everything from VAT registration checks to your accounts. (The VAT registration threshold is currently £90,000, tested on your true taxable turnover, not your net payouts.)

How is this different from selling on Amazon or eBay?

On a marketplace, the platform does a lot of the heavy lifting and reporting for you. On self-hosted WooCommerce, nobody does. You are the merchant of record, and you self-declare everything.

That third row matters. Under the UK's reporting rules for digital platforms, marketplaces like Amazon and eBay must report seller income to HMRC. But HMRC is explicit that you do not register as a reportable platform operator if you only "sell your own goods or services directly through your own website or app". A WooCommerce store selling its own products is not a platform, so there is no marketplace report filed about you. WooPayments and Stripe are payment processors, not marketplace operators, and the deemed-supplier rules that can shift VAT onto a marketplace simply don't exist for your self-hosted shop.

In short: the marketplace safety net is gone, so your reconciliation and your VAT return have to be right on their own. That's the trade-off for owning your store.

A practical add-on for WooCommerce specifically: because VAT is plugin-driven, a misconfigured tax setting (wrong rate, prices entered as VAT-exclusive when your theme treats them as inclusive, or geolocation rules misfiring) will quietly feed wrong numbers into every payout you reconcile. Get the tax configuration right at source, then reconcile.

Which VAT return boxes does this affect?

Getting the components right flows straight through to your VAT return. Here's where each piece lands for a typical UK standard-rated store.

Two reminders. First, your fees still appear in your accounts as a real business expense (they reduce profit), even though they don't reduce output VAT. Second, all VAT-registered businesses must keep digital records and file through compatible software under Making Tax Digital for VAT, so your reconciliation needs to land in MTD-ready software, not a stray spreadsheet that's copied across by hand.

The three reconciliation errors we see most

In practice, three mistakes account for most of the WooCommerce books we're asked to fix.

1. Booking the net payout as sales. This is the big one. It understates turnover by the fees, loses the VAT split, and can mask whether you've crossed the registration threshold. Always start from gross orders, never the bank deposit.

2. Forgetting the timing tail. A payout almost never lines up perfectly with a calendar month. Sales captured after the cut-off sit in the Stripe/WooPayments balance and pay out next period. Use a clearing account so month-end totals tie to orders, not just to cash received.

3. Trying to reclaim VAT on processing fees. Payment processing is generally an exempt financial service, so there's usually no input VAT to recover. Booking phantom input VAT on fees inflates your reclaim and is exactly the kind of error a VAT check picks up.

If you run a WooCommerce store and your payouts and VAT don't tie out, this is bread-and-butter work for an ecommerce accountant. You can see how we support online sellers on our ecommerce accounting page, and you can pressure-test your numbers with our VAT-aware self-employed tax calculator before you file.

Want your WooPayments and Stripe payouts reconciled properly and your VAT return tied back to real orders? Book a free 20-minute call with a Zmartly accountant via our ecommerce service and we'll review your setup.

FAQs

Talk to an e-commerce accountant →