The amount Amazon transfers to your bank is not your sales figure. It is a net cash payment after Amazon has processed sales, refunds, fees, advertising charges, adjustments and amounts held in reserve. Recording only the disbursement can understate turnover, hide expenses and distort VAT, profit and tax calculations.
What is an Amazon disbursement?
An Amazon disbursement is the amount released from the seller account to the nominated bank account for a settlement period. Amazon’s payment reports can contain customer orders, refunds, Amazon charges, reserve movements and transfers. The final bank receipt is therefore the result of several different transactions rather than one sales entry.
A disbursement may be lower than sales because Amazon has deducted or withheld:
- Referral fees
- FBA fulfilment and storage charges
- Subscription and advertising costs
- Customer refunds and chargebacks
- Promotional adjustments
- Reserve balances and deferred proceeds
It may also include reimbursements, released reserves or balances carried forward from an earlier period. This timing difference means a payment received this month may not relate only to this month’s orders.developer.
Sales, profit and cash
These three figures answer different questions.
| Figure | What it shows | Where it belongs |
|---|---|---|
| Gross sales | Customer income before Amazon costs | Turnover or sales ledger |
| Taxable profit | Income less allowable business costs | Income Tax or Corporation Tax calculation |
| Disbursement | Net cash Amazon transfers | Bank reconciliation |
HMRC’s Self Assessment guidance says turnover is total business income before expenses are deducted. Amazon charges may be allowable business expenses, but deducting them before recording turnover does not turn the resulting payout into sales.
A simple reconciliation
Consider an illustrative Amazon settlement:
| Settlement item | Amount |
|---|---|
| Product sales and delivery income | £20,000 |
| Customer refunds | £1,200 |
| Amazon selling and FBA fees | £3,300 |
| Advertising charges | £900 |
| Increase in reserve | £600 |
| Disbursement to bank | £14,000 |
The £14,000 bank receipt is not £14,000 of sales. The accounting records may show £20,000 of gross income, £1,200 of sales returns, relevant Amazon costs of £4,200 and a £600 asset representing money temporarily retained by Amazon. Subject to stock, VAT and other costs, this produces £14,600 before the reserve movement because a reserve is withheld cash, not an expense.
The reconciliation is:
£20,000 sales, less £1,200 refunds, less £4,200 fees and advertising, less £600 reserve increase, equals £14,000 paid.
Why the error matters
Turnover can be understated
Using the payout as income removes Amazon fees and other deductions from both sides of the accounts. Profit might sometimes appear similar where every cost is captured correctly, but reported turnover will still be wrong. In practice, reserve movements, refunds, reimbursements and timing differences often mean profit is wrong too.
An understated sales figure can affect VAT registration monitoring. A UK business must normally register when taxable turnover for the previous 12 months exceeds £90,000, or when it expects to exceed £90,000 in the next 30 days. The test concerns taxable turnover, not the cash Amazon deposits after charges.
VAT can be miscalculated
VAT registered sellers must record the value and VAT treatment of supplies, not merely bank receipts. Making Tax Digital requires specified VAT records to be kept digitally, including the time of supply, net value and VAT rate.
Marketplace VAT treatment can vary according to where the seller is established, where goods are located, their value and the customer’s status. Amazon fee invoices also need review because services received from an overseas supplier may fall within the reverse charge rules.
HMRC can compare platform data
Digital platform reporting rules have applied in the UK since 1 January 2024. Platform operators may report seller identity and income information to HMRC and must provide sellers with a copy of reported information. The platform report may use a calendar year, whereas a sole trader’s tax year runs from 6 April to 5 April, so reconciliation is essential.
Management information becomes unreliable
Net payouts do not show the true fee percentage, refund rate, advertising cost or gross margin. Without separate entries, a seller can mistake cash received for profitability, miss rising fulfilment costs and make poor stock or pricing decisions.
How to record Amazon activity
A sound monthly process should include:
- Download the settlement summary and transaction level report for every marketplace and currency.
- Record sales, shipping income, discounts, refunds, Amazon fees, advertising, reimbursements and reserve movements in separate accounts.
- Reconcile the settlement closing balance and disbursement to the bank receipt, allowing for transfer timing and currency conversion.
- Match Amazon fee invoices to the charges and review their VAT treatment.
- Reconcile marketplace sales to VAT records, inventory and the accounting period used for the tax return.
- Investigate unexplained adjustments rather than posting the difference to general expenses.
Companies must keep adequate records of money received, money spent and supporting documents, generally for six years from the end of the relevant financial year. VAT records must also usually be retained for at least six years.
Common bookkeeping mistakes
- Posting each Amazon bank receipt directly to sales
- Treating a reserve as an expense instead of money due from Amazon
- Recording only net fees without checking VAT invoices
- Omitting reimbursements, chargebacks and refunded commission
- Mixing sterling and foreign currency settlements without exchange adjustments
- Matching calendar year platform data directly to a UK tax year
- Ignoring unsold FBA inventory when calculating cost of sales
How UK ecommerce accountants help
Amazon accounting involves much more than matching a disbursement to a bank transaction. UK ecommerce accountants specialise in the accounting and tax challenges faced by Amazon sellers, combining Seller Central data with bookkeeping records to reconcile gross sales, refunds, referral fees, FBA charges, advertising costs, reimbursements, reserve balances and the final amount transferred to the bank.
Our dedicated Amazon accountants ensure that Amazon income is recorded completely rather than treating the net payout as turnover. We reconcile settlement reports with bank receipts, investigate unexplained adjustments and compare Amazon platform data with the accounting records before VAT returns, management accounts and annual tax returns are submitted. This gives sellers clearer information about gross margins, fulfilment costs, advertising performance, stock profitability and cash flow.
Frequently asked questions:
Should Amazon payouts be entered as sales?
No. A payout is a net transfer. Sales, refunds, fees, adjustments and reserve movements should be identified from the settlement data and posted separately.
Do Amazon fees reduce taxable profit?
Genuine business costs can generally reduce taxable profit if they meet the normal tax rules. They should still be recorded as expenses rather than netted against turnover.
Is money held in an Amazon reserve an expense?
Usually no. A reserve is normally cash temporarily retained to cover potential refunds, claims or chargebacks. It is generally recorded as money receivable until released or otherwise applie
