Corporation Tax for E-commerce: Maximising Deductions for Your Amazon Business in 2026

Corporation Tax for E-commerce: Maximising Deductions for Your Amazon Business in 2026

Managing an Amazon FBA business in 2026 is a different beast to what it was a few years ago. With the 2026 tax landscape firmly in place, including the 25% main rate for larger brands and the tiered small profits rate, proactive tax planning isn't just a "nice to have"—it is the difference between a thriving brand and one that’s struggling with cash flow.

As an ecommerce accountant UK specialist, I see many seven-figure sellers who are still leaving money on the table. They treat their Amazon settlement reports like a simple bank statement, but those net deposits hide a mountain of deductible expenses. To keep your Corporation Tax bill as lean as possible, you need to understand the specifics of 2026 tax law and how it applies to the unique world of FBA.

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What are the 2026 Corporation Tax Rates?

For the 2026 financial year, the UK continues with the tiered structure introduced previously:

• 19% (Small Profits Rate): Applies if your taxable profits are £50,000 or less.
• 25% (Main Rate): Applies if your taxable profits exceed £250,000.
• Marginal Relief: If your profits fall between £50,000 and £250,000, you pay an effective rate that slides between 19% and 25%.

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What this means for you:

If your Amazon brand is scaling toward that £250,000 profit mark, every single deduction counts more than ever. Missing out on £10,000 of legitimate expenses doesn't just cost you the tax—it could potentially push you into a higher effective tax bracket.

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The "Hidden" Amazon Deductions You Must Claim

Standard bookkeeping often misses the granular fees buried in your Seller Central reports. Effective amazon fba bookkeeping requires a line-by-line breakdown of every fee Amazon charges before they send you your payout.

1. FBA Operational Fees

Beyond the standard referral fees, ensure you are deducting:

• Aged Inventory Surcharges: These can skyrocket if stock isn't moving. They are fully deductible.
• FBA Prep & Labelling: If Amazon handles your poly-bagging or barcoding, these are direct business costs.
• Disposal & Removal Fees: The cost of destroying or returning unsellable stock is an allowable expense.

2. Marketing & PPC

Advertising is likely your second-highest cost after stock. In 2026, Amazon's PPC environment is hyper-competitive. Ensure your amazon bookkeeping services accurately separate "Advertising" from "General Marketing" so you can monitor your true ROI while ensuring HMRC sees the full cost of your sales.

3. Capital Allowances & the "Full Expensing" Boost

Under the 2026 rules, "Full Expensing" and the new 40% first-year allowance are vital for brands investing in infrastructure. If you’ve bought new warehouse equipment, high-end photography gear for listing images, or even heavy-duty IT hardware this year, you can often deduct the entire cost (or a significant portion) from your profits in year one.

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Why an Amazon Specialist Accountant is Non-Negotiable

Generalist accountants often struggle with the "integration gap." For example, the software integration for creators and affiliates moving into physical products is still fragmented in 2026. You need a specialist who understands how to bridge the gap between TikTok Shop payouts, Amazon settlements, and Xero.

As a dedicated amazon fba accountant, we focus on:

• Reconciling Settlements: Not just recording the bank deposit, but accounting for the gross sales, VAT, and fees separately.
• Inventory Valuation: Correctly calculating your Cost of Goods Sold (COGS) so you aren't paying tax on stock that hasn't sold yet.
• The Reverse Charge: Properly handling VAT on Amazon’s fees (which are often invoiced from the EU) to avoid compliance headaches.

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Common Questions: Amazon & UK Tax

Can I claim my home office? Yes. If you run your seven-figure brand from a home office, you can claim a proportion of your household running costs. For larger companies, we often set up a formal "License to Occupy" agreement to maximise this deduction.

How do I handle international sales? If you use Pan-EU FBA, your tax obligations are complex. You’ll have VAT obligations in multiple countries, but the costs associated with those filings are all deductible for UK Corporation Tax.

Is my inventory an expense? Only when it sells. Inventory sitting in an FBA warehouse is an asset. A common mistake is trying to "expense" a massive stock order at year-end to lower tax—HMRC will see right through that.

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About the Author: Sam Hoye

I’m the founder of Social Commerce Accountants. We don’t do "high street" accounting. We work with the modern breed of entrepreneur: TikTok sellers, Amazon FBA giants, and D2C brand owners. We speak your language—from Xero integrations to A2X reconciliations—ensuring your business is as tax-efficient as it is scalable.

Summary 

• Key Rates: 19% for profits under £50k, 25% for profits over £250k.
• Strategy: Maximise deductions by line-iteming all Amazon FBA fees, PPC spend, and capital allowances.
• Expert Advice: Use a specialized fba accountant to handle the complex reconciliation between Amazon settlements and UK tax law.
• Inventory Tip: Only the Cost of Goods Sold (COGS) is deductible; unsold stock remains an asset on the balance sheet.

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