If you still don’t know what expenses you can and should claim from your taxes as an Amazon Seller in the UK, then this blog is surely for you. Read more to know more!
Amazon Seller Tax UK: Top 10 Expenses You Should Claim From Your Tax as an Amazon Seller in the UK
This article outlines how to treat Amazon Seller Tax in the UK VAT obligations if you sell items on an online marketplace in the United Kingdom. It provides ten expenses that can be deducted from your taxes and concludes with frequently asked questions.
At Sterlinx Global, we provide expert advice on how to deal with taxes as an e-commerce business and ensure you can focus on your customers and running successful businesses.
1. Shipping fees (manufacturer to the UK)
It’s true that for 1st and 2nd class stamps from Royal Mail, you do not have to pay VAT. This is why many online merchants believe they are exempt from charging VAT on delivery when sending a package to a customer.
When shipping from the U.K to another nation, UK VAT is usually not applied to the items or the shipping expenses. VAT is only charged when shipping from Northern Ireland to an EU nation.
In all other circumstances, you can use the zero rate for UK VAT on both the merchandise and the shipping expenses you charge to your consumers. It is important to pay specific attention to what parts of your shipping can be deducted from your final VAT bill.
2. Import VAT and duties
The cost of paying import taxes and tariffs on raw materials, resale goods, or things utilized in your day-to-day activities is deductible. According to HMRC, anything that is used to facilitate or support the sale of a good or service to a customer is tax-deductible. This differs from one e-commerce seller to another.
3. Delivery fees (seller to buyer)
Shipping is certainly one of your top responsibilities as an eCommerce firm, and unless you’re a dropshipping company, you should ensure your customers receive their orders. As a result, shipping is considered an “ordinary and necessary” business expense, which means that postage, shipping meter subscriptions, and delivery expenses are all tax-deductible.
This deduction includes the packaging itself, which includes envelopes, paper, tape, labels, packing supplies, and printer ink.
4. Storage cost (if they store their goods in a fulfillment center)
Self-storage facilities are tax-deductible because they are an authorized expense. You can claim back the VAT you were charged if you are VAT registered. This does imply that the storage must be used for corporate purposes rather than personal storage.
You cannot claim the VAT back if it is not levied, and you must pay the entire price. However, because self-storage is legally required to charge VAT, you should inquire as to why this isn’t happening.
5. Office rent (if they have a physical office)
Renting/renting out space for your business can be deducted from your business income. All costs incurred during a business’s activities are deductible. You’ll be able to enter your business income into Turbo Tax as soon as you’ve computed it (Self Employed).
6. Fulfillment cost (if they store their goods in a separate warehouse)
Subject to standard rules, you can claim VAT as input tax if you have proof to back up your claim. During the month after payment, the owner of the items who are responsible for paying any VAT due on removal from the warehouse will be issued a certificate (C79). This paper serves as legal proof that the VAT paid on warehouse removals was paid as input tax.
7. Advertising & marketing costs
The cost of engaging a designer, copywriter, or another marketing professional to generate advertisements can be deducted from your tax bill. It’s also worth investigating whether you may deduct the cost of software or apps that help you manage email and Facebook advertising from your taxes. You can also claim the cost of creating and distributing free samples with your logo on them.
8. Accounting cost
Yes, the quick answer is yes. The HMRC permits businesses to claim a tax deduction for a portion of their accountant’s expenses. Please keep in mind that not all fees are tax-deductible due to the nature of accountants’ jobs.
Accountants help businesses with a wide range of services, including completing company accounts and financial statements for the majority, if not all, of them.
9. Legal cost
Legal fees incurred as part of a company’s routine business operations (revenue expenses) are often permitted as a deduction against corporation tax. Legal expenditures for employment-related matters will be included.
10. Salaries expense
The wages and salaries paid to employees are the most significant cost of hiring them. These are deductible when calculating the business’s profits. The employer can deduct NIC and PAYE paid to HMRC in addition to the amounts paid to employees. Employers’ national insurance contributions are also deductible.
Here is a list of recently asked questions about the top 10 expenses you should claim from your tax as an Amazon seller in the UK
What other costs are tax-deductible?
More than only the employee’s compensation or salary may be included in the remuneration package. Non-cash benefits, such as a corporate automobile or private health care, may be provided to the employee. The cost of giving these benefits to the employer is also deducted from the company’s profits.
Are freelancer costs tax-deductible?
These charges are tax-deductible if you engage a freelance contractor to design your website, produce content, or photograph your merchandise. However, keep in mind that HM Revenue and Customs is always on the lookout for business owners who try to classify employees as freelancers to avoid paying PAYE and other taxes.
Can I deduct costs related to my website?
To run a successful eCommerce business, you’ll need an online store. As a result, the costs of hosting your website, registering a domain, and paying for technical support to keep your site up and running are all potentially tax-deductible expenses.
If in doubt, you can rely on this guide to better understand what expenses you can deduct. However, this article is merely a guide, and you can always rely on our expert advice at Sterlinx Global to ensure your business continues to thrive while we take care of the tax stuff.