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We’ve all seen it happen. You wake up, check your phone, and the notifications are stuck in a loop. A video has picked up traction, the algorithm has blessed you, and the orders are flying in.
For a brand owner, this is the dream. But for a TikTok Shop seller accountant like me, this is usually where the panic sets in.
Why? Because "going viral" is expensive.
In 2025, turnover is vanity, profit is sanity, and cash is reality. I have seen too many e commerce businesses process £50,000 in a weekend only to realise, after fees, ads, shipping, and returns, they have actually lost money on every single unit sold.
If you are serious about selling on TikTok Shop, you need to look past the top-line revenue and understand the granular costs eating into your bottom line. We aren't just talking about the platform commission; we are talking about the "hidden" costs of scale, the accounting nightmares for affiliates, and the tax implications that generalist accountants miss.
Let’s break down exactly what it costs to sell on TikTok Shop in late 2025 and how to protect your margins.
The days of TikTok subsidising every aspect of the sale to get merchants on board are fading. As the platform matures, it is moving closer to the Amazon model—monetising every touchpoint.
To understand your TikTok Shop profit margin, you first need to understand the base costs.
TikTok Shop’s commission structure has become aggressive. While they started with introductory rates, the platform shifted to a standard 9% commission rate for the UK market back in late 2024.
What this means for you:
Never calculate your margin based on the product price alone. The 9% fee is calculated on the total amount the customer pays—this includes the shipping fee if the customer pays for it.
This is the new sting for 2025 that catches most sellers off guard. If you choose to ship orders yourself (Merchant Fulfilled) rather than using TikTok's fulfillment service (FBT), you are now charged a £0.50 "Shipped by Seller" fee per order.
On a £10 item, that 50p fee coupled with the commission can instantly wipe out 10-15% of your gross margin before you’ve even packed the box.
On top of the commission, there is the payment processing fee. This is the cost of moving the money from the customer's bank to TikTok's escrow. It usually sits around 20p to 30p per transaction, depending on the payment method used by the buyer.
Here is where generalist accountants mess up. TikTok Shop fees in the UK are typically invoiced by Perceiver Limited, a UK entity. This means the fees include 20% UK VAT.
Furthermore, your settlement from TikTok is the net amount (Sales minus Fees). If you just record the net deposit in your bank as "Sales," you are under-reporting your turnover and under-claiming your VAT on expenses.
As a specialist e commerce accountant, I spend a lot of time analysing logistics costs. In 2025, TikTok is pushing FBT (Fulfilment by TikTok) hard to compete with Amazon FBA.
FBT simplifies your life, but it changes your P&L structure.
The benefit of FBT is the "Shop Choice" badge, the algorithmic boost, and avoiding the £0.50 Shipped by Seller fee. However, for low-ticket items (under £15), FBT fees can still obliterate your profit if you don't have a high enough sell-through rate.
If you ship yourself, you control the logistics cost, but TikTok penalises late dispatch heavily. If you go viral and cannot physically pack 500 orders in 24 hours:
The Financial Trade-off:
FBT is an insurance policy against viral spikes. You pay a premium for it, but you avoid the cost of account suspension and the manual shipping surcharges.
When we build financial forecasts for our clients, we include a line item I call "The Chaos Factor." These are the costs that don't appear on a rate card but appear on your bank statement.
On Shopify, you control the refund policy. On TikTok Shop, the platform almost always sides with the buyer. When a refund happens:
A 5% return rate can reduce your net profit by 15-20% depending on your margins.
To get affiliates to promote you, you send free samples. Many sellers book this as "Marketing Cost," but they forget the shipping and the VAT implications of "deemed supply" if not handled correctly. If you send out 500 units to influencers and only 10 post a video, your Customer Acquisition Cost (CAC) just skyrocketed.
TikTok holds cash. Especially for new sellers or after a viral spike, they apply a "reserve." They might hold 10% to 30% of your funds for up to 90 days to cover potential chargebacks.
If you need that cash to buy more stock to fulfill the viral orders, you are in trouble. This is the number one reason high-growth TikTok brands go bust—not lack of profit, but lack of cash.
This is the most critical part of this article. If you take one thing away, let it be this technical advice regarding your software stack.
There is a massive difference between being a Brand Seller on TikTok and being a Creator/Affiliate, and the accounting software market has not caught up.
If you are a brand selling your own inventory, you need robust integration. We typically recommend A2X or Link My Books.
Here is the problem: A2X and Link My Books do not work for TikTok Affiliates.
The API (the data bridge) provided by TikTok for sellers is different from the one for creators. If you are an influencer earning commission by promoting other people's products, the automated software cannot currently "see" those commission statements in a way that allows for clean reconciliation.
What this means for you:
If you are a creator or an agency managing creators, do not buy a subscription to these connector apps thinking it will solve your problems. It won't. You currently need a specialist TikTok accountant who understands how to map these payments manually or via custom CSV parsers.
If you are running paid ads (Spark Ads) to drive traffic, you need to know your Break-Even Return on Ad Spend (ROAS).
Most people calculate it like this:
This is wrong.
Here is the 2025 Reality Calculation (Self-Shipped Order):
The Result: You don't have £15 to spend. You have £6.57.
If your CPA (Cost Per Acquisition) on ads is £8.00, you are losing money on every single order, even though your dashboard says you are profitable.
Is the TikTok Shop referral fee increasing in 2025?
Yes, for many sellers the reality has already hit. The standard commission rate in the UK is now 9% (up from previous introductory rates of 1.8% or 5%). Always check your Seller Center for the current rate card, but 9% is the new normal.
What is the £0.50 shipping fee I keep hearing about?
As of July 2025, TikTok charges a £0.50 fee per order for items that are "Shipped by Seller" (i.e., you ship it yourself). You can avoid this by using "Shipped by Platform" or FBT services, though those come with their own fees.
Can I use QuickBooks for TikTok Shop accounting?
You can, but we don't recommend it. Xero offers superior integration with tools like Link My Books and A2X, which are essential for handling the high volume of transactions and complex fee structures found in TikTok Shop settlements.
Do I pay VAT on TikTok Shop fees?
Yes. TikTok Shop fees are services provided to you, and they usually carry VAT. You must account for this correctly. Since TikTok often bills from a UK entity (Perceiver Ltd), this is usually standard UK Input VAT, not a Reverse Charge.
Selling on TikTok Shop offers unprecedented scale. We have clients who have gone from zero to £1m turnover in six months. But scale without financial clarity is dangerous.
The 9% commission, the £0.50 seller-shipping penalty, and the "hidden" costs of returns can turn a viral moment into a cash flow crisis.
You need to know your numbers. You need the right tech stack (Xero + the right integrator). And you need to distinguish between being a seller and an affiliate.
If you are looking for a TikTok accountant who understands the difference between a Spark Ad and a Dark Post, and who knows why your settlement doesn't match your sales dashboard, we should talk.
About Author
Sam Hoye is the Co-Founder and Managing Director of Social Commerce Accountants, bringing over 15 years of expertise to the digital frontier. Specializing in high-growth e-commerce, Sam helps TikTok Shop sellers, Amazon FBA brands, and Shopify merchants navigate the complexities of UK tax and international compliance.
Unlike traditional high-street firms, Sam understands the difference between an ASIN and an SKU, and knows exactly how to handle platform payouts, settlement reports, and cross-border VAT. He works with 7-figure sellers daily to turn chaotic data into compliant, investor-ready financials.
Is your TikTok Shop accounting keeping you awake at night? Contact us here.
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