Do I pay VAT on Amazon seller fees in the UK?
Yes — 20%, since 1 August 2024. Whether that costs you anything depends on your VAT position, and the per-unit answer is the opposite of what most sellers expect.
The short answer
Yes. Since 1 August 2024, UK sellers are charged 20% VAT on Amazon's selling fees. If you are VAT registered you reclaim it on your return, so the fee costs what it says. If you are not registered you cannot reclaim it, so every Amazon fee is 20% more than the published figure — including the £25 monthly subscription, which becomes £30.
That is the tax answer. The more useful question is what it does to the money you keep on one unit, and there the ranking surprises people.
What changed, and why
Until 31 July 2024, Selling on Amazon and FBA were supplied to European sellers by Amazon Services Europe S.à r.l., which had no UK establishment. From 1 August 2024 those services are supplied by Amazon EU S.à r.l., and sellers established in the UK are invoiced by its UK branch. Local VAT rules therefore apply, and VAT is charged on the fees. Amazon's announcement of the change lists the nine countries affected and says most sellers recover the VAT through their normal return.
Nothing about the fee rates themselves changed. What changed is who invoices them and whether VAT sits on top.
What it costs on one unit
Take one product and hold everything constant except the VAT regime. A Toys and Games item, 20 × 15 × 4 cm and 350 g, sold at £24.99, bought for £8.40 net with £0.20 of prep. Amazon's fees on that sale come to £6.60 net: £2.72 fulfilment, £3.75 referral and £0.13 of digital services fee.
| Per unit at £24.99 | VAT registered | Not registered | Flat Rate 7.5% |
|---|---|---|---|
| VAT handed to HMRC on the sale | £4.17 | £0.00 | £1.87 |
| Amazon's fees as they land on you | £6.60 | £7.92 | £7.92 |
| Stock and prep as they land on you | £8.60 | £10.32 | £10.32 |
| Left per unit | £5.62 | £6.75 | £4.88 |
| Break-even price | £16.27 | £16.27 | £17.91 |
The unreclaimable VAT is real: £1.32 on the fees and £1.72 on stock and prep, a little over £3 per unit. It is simply smaller than the £4.17 of VAT a registered seller hands over on the same sale.
Why the unregistered seller keeps more
Because VAT registration is not only a reclaim; it is also an obligation on every sale. On Amazon.co.uk the price is what the customer pays, VAT included. A registered seller sends a sixth of that price to HMRC. An unregistered seller keeps the whole £24.99 and pays 20% more for their inputs.
A sixth of the shelf price is nearly always larger than a fifth of your costs, because your costs are less than the price — otherwise there would be no business. That is the whole mechanism, and it is why the Flat Rate Scheme lands worst in the table: 7.5% of gross turnover goes out and input VAT stays unreclaimable.
Where that reverses
The comparison above assumes you sell standard-rated goods. If your products are zero-rated — most food, books, children's clothing — there is little or no output VAT on the sale, so registration turns into a reclaim with almost nothing going the other way. On a zero-rated catalogue, registering is usually the cheaper position, not the more expensive one.
Mixed catalogues need the split done properly rather than averaged. Our own calculator applies one standard rate to stock and prep, which overstates the cost base for a zero-rated line — we would rather say so than have you reconcile a figure that quietly assumed a rate your goods do not carry.
The thresholds that make the choice for you
The choice is only yours until turnover decides it:
- £90,000 — you must register once taxable turnover in the last 12 months goes over it, within 30 days of the end of that month; or immediately if you expect to pass it in the next 30 days (GOV.UK). It is a rolling test, not a financial year.
- £150,000 — the ceiling for joining the Flat Rate Scheme, where you cannot reclaim input VAT except on certain capital assets over £2,000 (GOV.UK).
The practical consequence for pricing is that crossing £90,000 changes your break-even and your floor on the same day. Work out what your prices need to be under the new regime before you get there, not after the first return.
Where Eve helps
Our free UK FBA calculator has the three regimes as a selector, so you can run the comparison above on your own product in about a minute. No account needed.
Inside Eve the same model runs everywhere: cost of goods in Catalogue is always the net figure on the supplier's invoice — one column, one meaning — and the VAT you cannot reclaim is applied by the calculation rather than typed into the cost. That keeps Performance, Scout and the Repricing floors consistent with each other, and it means changing regime does not require re-entering a catalogue of costs.
Common questions
Does Amazon charge VAT on fees if I am not VAT registered?
Yes. VAT is charged because Amazon EU S.à r.l. invoices UK sellers through its UK branch, not because of your registration status. Registration decides whether you can reclaim it, not whether it is charged.
Which Amazon fees carry VAT?
Amazon's announcement covers Selling on Amazon, Fulfilment by Amazon and its other services, so referral fees, fulfilment fees, storage and the monthly subscription are all invoiced by the same entity. Amazon's published rates are quoted excluding VAT.
Should I register for VAT voluntarily to reclaim it?
Not on the strength of the fee reclaim alone. On standard-rated goods sold to consumers, the VAT you hand over on sales is usually larger than the VAT you recover on costs. On zero-rated goods the arithmetic reverses. Run your own numbers, and take advice before deciding.
Is the Flat Rate Scheme better for an Amazon seller?
It was the worst of the three in the worked example, because a percentage of gross turnover leaves and input VAT still cannot be reclaimed. It can still suit a business with few costs. The rate that applies depends on your trade sector and the limited cost business rules.
Sources and scope
Checked 10 September 2026. The entity and VAT change is from Amazon's Seller Central announcement of 1 August 2024. Registration and Flat Rate Scheme rules are from GOV.UK. Plan and fee figures are from Amazon's UK selling fees page and the UK rate card effective 1 July 2026 that our calculator uses; the product, cost and prep amounts are invented for the example, and the flat rate of 7.5% is illustrative. Figures were computed with the calculator's own arithmetic. This is an explanation of per-unit arithmetic, not tax advice — the registration decision belongs with your accountant.