If you are a sole trader selling on Amazon, you need to file a Self Assessment tax return with HMRC each year. This is not optional — it is a legal requirement once your trading income exceeds £1,000. Here is what you need to know.
Registering for Self Assessment
If you have not already registered, you need to tell HMRC you are self-employed. Do this by registering for Self Assessment on the HMRC website. You will receive a Unique Taxpayer Reference (UTR) number, which you need for filing your returns. Register as soon as you start trading — there are penalties for late registration.
What to Declare
On your Self Assessment return, you declare your total income from Amazon (gross sales revenue before Amazon's fees) and your allowable business expenses. The difference — your profit — is what you pay tax on.
Amazon provides detailed payment reports in Seller Central that show your gross sales, fees deducted, refunds processed, and net payments received. These reports are your primary source for the income figures on your tax return.
Allowable Expenses
You can deduct any expense incurred wholly and exclusively for your Amazon business. Common deductions include cost of goods sold (what you paid for your stock), Amazon fees (referral, fulfilment, storage, advertising), prep and shipping costs, software subscriptions, home office expenses (a proportion of your rent or mortgage, utilities, and broadband), mileage for sourcing trips, and professional fees (accountant, legal).
Keep receipts and records for every deduction. If HMRC queries your return, you need to be able to evidence each expense.
Key Deadlines
The tax year runs from 6 April to 5 April. Your Self Assessment return for the year ending 5 April 2027, for example, must be filed online by 31 January 2028. Payment of any tax owed is also due by 31 January.
If your tax bill exceeds £1,000, HMRC may require payments on account — advance payments towards next year's tax bill, due on 31 January and 31 July. Your accountant can advise on whether this applies to you.
Common Mistakes
Under-reporting income is the most serious mistake. HMRC has access to Amazon's records and can cross-reference your declared income. Forgetting to claim allowable expenses means you pay more tax than necessary. And missing deadlines results in automatic penalties — even if you do not owe any tax.
Getting Help
A good accountant who understands e-commerce pays for themselves. They ensure you claim every allowable expense, file correctly and on time, and advise on tax-efficient strategies. The accountancy fee itself is a deductible expense. If your Amazon income is more than a few thousand pounds, professional help is well worth the investment.