Use gross sales revenue, not your Amazon settlement payout after fees.
If you sell products through Amazon FBA, Amazon Seller Central, or a mix of Amazon plus other channels, you're self-employed (or running through a business structure) for tax purposes. and the same Making Tax Digital gross-income rule applies to you as to any other trader. The single most common mistake sellers make with MTD is using the wrong number entirely: mistaking their Amazon settlement payout, the amount that actually lands in your bank, for their real gross sales revenue.
These two figures can differ by a huge margin once you account for referral fees, FBA fulfilment fees, storage fees and refunds. Getting this distinction right matters, because MTD qualifying income is based on gross sales, not on what Amazon actually pays out.
Your MTD Threshold as an Online Seller
Tax Year Assessed
Threshold
MTD Start Date
2024–25
Over £50,000
6 April 2026. Live since April 2026
2025–26
Over £30,000
6 April 2027
2026–27
Over £20,000
6 April 2028
Do not confuse the MTD threshold with the £90,000 VAT registration threshold. These are two completely separate rules, assessed differently, with different consequences. You could exceed the MTD threshold years before you approach the VAT threshold.
Gross Sales vs. Settlement Payout
Amazon's settlement report shows the net figure actually deposited into your bank account, after deducting:
Referral fees — Amazon's commission, typically 8–15% depending on category
FBA fulfilment fees — picking, packing and shipping charges per unit
Storage fees — monthly and long-term storage charges
Refunds and returns — deducted from the payout period they occurred in
Advertising spend — PPC campaign costs, if paid through Amazon's ad platform
None of these reduce your MTD qualifying income. They are business expenses that reduce your taxable profit, calculated separately. For MTD threshold purposes, you need your gross order value, the total price customers actually paid, before Amazon took anything out.
Worked Examples
Example 1. Full-time FBA seller
Amazon gross sales (order value)£68,000
Amazon fees, FBA, storage, ads (expense, not deducted from gross)−£21,300 (expense)
Amazon settlement payout received£46,700 (not the MTD figure)
MTD qualifying income (gross sales)£68,000
Mandatory — Live Now. based on gross sales, not settlement payout
Example 2. Multi-channel side-business seller
Amazon gross sales£11,500
eBay + own Shopify store gross sales£7,800
MTD qualifying income (combined gross)£19,300
Below all current thresholds. still register for Self Assessment if trading regularly
What You Can Claim as an Online Seller
Expense Category
Examples
Cost of goods sold (COGS)
What you paid your supplier or manufacturer for stock
Platform fees
Amazon referral fees, FBA fulfilment and storage fees
Advertising
Amazon PPC, social media ads, influencer spend
Shipping and packaging
Inbound freight to FBA warehouses, branded packaging
Software and tools
Inventory management, repricing, keyword research tools
Photography and listing costs
Product photography, copywriting for listings
MTD and VAT: Two Separate Systems
It's worth being explicit about this because it trips up a lot of growing sellers. MTD for Income Tax and VAT registration are entirely independent obligations with different thresholds and different rules:
VAT registration threshold: £90,000 in taxable turnover in any rolling 12-month period. once registered, MTD for VAT (a separate, older, already-mandatory scheme) applies to your VAT returns.
MTD for Income Tax threshold: Based on gross qualifying income from self-employment and property, phased at £50,000 / £30,000 / £20,000, entirely separate from VAT.
A seller with £45,000 in gross Amazon sales is below the VAT threshold but, from April 2027, is above the MTD for Income Tax threshold. You need to track both independently.
Practical Digital Records for Sellers
Export gross sales reports from Seller Central monthly, not just settlement reports
Reconcile settlement payouts against gross sales so the fee deductions are recorded as expenses, not silently netted off
Track COGS by SKU using inventory management software linked to your accounting software
Combine multi-channel sales into one bookkeeping system rather than treating each marketplace separately
Keep supplier invoices for all stock purchases, ideally digitised as they arrive
Software links are affiliate. help fund CheckMyMTD. Recommendations based on ecommerce and multi-channel reconciliation support.
MTD Quarterly Deadlines for Sellers
Quarter
Period
Deadline
2026–27 Soft Landing
Q1
6 Apr – 5 Jul 2026
7 Aug 2026
No points if late
Q2
6 Jul – 5 Oct 2026
7 Nov 2026
No points if late
Q3
6 Oct 2026 – 5 Jan 2027
7 Feb 2027
No points if late
Q4
6 Jan – 5 Apr 2027
7 May 2027
No points if late
Final Declaration
Full year 2026–27
31 Jan 2028
Not soft-landed
Frequently Asked Questions
Gross sales. Your Amazon settlement report shows the net amount paid to your bank after referral fees, FBA fees and other charges are deducted, but MTD qualifying income is based on gross sales revenue before any of these deductions. This is a common and costly mistake, since settlement totals can be 15 to 40 percent lower than actual gross sales.
No, they are separate. The UK VAT registration threshold is £90,000 in taxable turnover. MTD for Income Tax thresholds are lower and phased: £50,000 from April 2026, £30,000 from April 2027, and £20,000 from April 2028. You could cross the MTD threshold well before you need to register for VAT.
Yes. If you sell through multiple channels as one self-employed business, all gross sales are combined to determine your total MTD qualifying income, regardless of which platform or website generated the sale.
No. What you paid your supplier for stock is a business expense that reduces your taxable profit, not your gross qualifying income. MTD thresholds are assessed on gross sales revenue before any costs, including inventory costs, are deducted.
Only your gross self-employment selling income counts towards the MTD threshold, not your PAYE salary. If your Amazon gross sales stay below the relevant threshold for your phase, you will not need to comply with MTD, even if your combined total income is high.
Check Your Full MTD Position
Our free calculator checks your exact threshold, gives you your deadlines, and recommends software with strong ecommerce integrations.
