- Your payout is net of fees, so it isn't your sales figure.
- Record gross sales as income and each platform fee as an expense.
- Overseas platform fees usually fall under the VAT reverse charge.
Marketplace fees accounting starts with one rule: the payout that lands in your bank is what’s left after the platform takes its fees, so it isn’t your sales figure. Record the gross value of your sales as income, and record each fee the platform charges as its own expense. That split is exactly the setup an ecommerce accountant gets right from day one.
Log only the payout and you understate your turnover, miss the fees you could claim, and can think you’re under the £90,000 VAT registration threshold when your gross sales have already passed it. And because most platforms invoice their fees from outside the UK, the VAT reverse charge usually applies on your return.
What’s actually inside a marketplace payout?
A payout is a net figure. The platform starts with your gross sales for the period, subtracts refunds and every fee it charges, applies any adjustments, and sends the balance to your bank. If you’re setting up an online selling business, that single number hides most of what your accounts need.
Here’s one fortnightly settlement, taken apart. The figures are illustrative, and this is the gross sales vs payout distinction in one view.
| Settlement line | What it is | Where it goes in the accounts | VAT treatment |
|---|---|---|---|
| Gross sales £5,000.00 | The full value customers paid | Income (turnover) | Output VAT due on standard-rated sales if you’re registered; for some sales the marketplace is the deemed supplier and accounts for the VAT |
| Refunds -£150.00 | Money returned to customers | Reduces income | Reduces your output VAT in the period the refund is credited |
| Referral / commission fee -£600.00 | The platform’s cut of each sale | Expense | Reclaim as input VAT if UK VAT is charged; reverse charge if invoiced from overseas |
| Fulfilment fee -£420.00 | Pick, pack and ship handled by the platform | Expense | As above: input VAT or reverse charge |
| Advertising -£180.00 | Sponsored listings and ads | Expense | As above: advertising from an overseas supplier is a common reverse-charge item |
| Subscription -£30.00 | Your monthly selling plan | Expense | As above: input VAT or reverse charge |
| Adjustment +£25.00 | A reimbursement or correction from the platform | Other income, or a credit against the related expense | Depends on what it corrects; check the settlement detail |
| Net payout £3,645.00 | What actually reaches your bank | Not a line of its own; it’s the balancing figure | None; it’s a transfer, not a sale |
Eight lines, one bank deposit. Knowing how to record marketplace payouts means recording all eight, not just the last one.
What goes wrong if you record the payout as turnover?
Book the £3,645.00 as a sale and three things break at once. Your turnover is understated by the fees and refunds, so your accounts show less revenue than the business actually made.
You also never claim the referral, fulfilment, advertising and subscription fees as expenses, which overstates your profit and your tax. And the understated turnover distorts the VAT registration threshold: the £90,000 test uses your gross sales, not your payouts, so you can cross it while your books say you haven’t. A seller doing this for a year has accounts that are wrong in three directions.
How do gross sales, refunds and chargebacks sit in your accounts?
Gross sales are your income line, recorded at the full price the customer paid before the platform touches it. This is the gross sales vs payout point again, and it’s the one that decides your VAT position.
Refunds reduce that income in the period they’re credited, along with any VAT you’d charged. Chargebacks work the same way, though the platform may also add a dispute fee, which is a separate expense. Match each refund back to the original sale so the numbers reconcile later.
How should you treat each marketplace fee?
Every fee the platform deducts is a business expense that reduces your taxable profit. Group them so your accounts stay readable rather than logging one lump.
- Referral or commission fees: the platform’s percentage of each sale.
- Fulfilment and shipping fees: storage, pick, pack and delivery.
- Advertising: sponsored listings and pay-per-click.
- Subscription fees: your monthly selling plan.
- Payment processing: card and settlement charges, where billed separately.
That’s the core of accounting for platform fees in the UK: name the category, claim the expense, keep the VAT treatment consistent. Getting accounting for platform fees right is also what stops your margin looking healthier than it is.
Do you pay VAT on marketplace fees, and when does the reverse charge apply?
It depends on where the platform invoices from, so check the fee invoice first. If it shows UK VAT, reclaim that VAT as input tax in the normal way, subject to your usual recovery rules.
If the fee is invoiced from a company based outside the UK, the VAT reverse charge usually applies. You account for the VAT yourself: add it as output tax and reclaim the same amount as input tax, so a fully taxable business pays nothing net. Give the platform your VAT number so it doesn’t add foreign VAT, and note that if you’re not yet registered, the value of these overseas services counts towards the £90,000 threshold in its own right.
How do you reconcile a settlement report to your bank?
Marketplace payout reconciliation ties one settlement report to one bank deposit. Do it every payout while the detail is fresh.
- Download the settlement report for the period.
- Post gross sales to income and each fee category to its expense account.
- Post refunds and adjustments to the right period.
- Apply the VAT treatment per line, including any reverse charge.
- Check the net of all lines equals the bank deposit to the penny.
If the platform holds a reserve or the payout straddles your period end, the amount it’s still holding at the balance sheet date is money owed to you. Record it as trade debtors so the sale sits in the right year even though the cash hasn’t arrived. Regular marketplace payout reconciliation is what keeps outsourced bookkeeping clean rather than a year-end scramble.
What changes when you sell in more than one currency?
Record each sale in sterling using the exchange rate at the point of sale, not the rate on the day the payout clears. The platform converts at its own rate when it pays you, so the two rarely match.
That difference is a foreign exchange gain or loss, and it belongs in its own line, not in turnover. For VAT you must convert using an acceptable rate, such as HMRC’s published period rate. Keeping the conversion consistent is a quiet but real part of ecommerce payout bookkeeping.
What do the marketplace integrations do, and what do they leave for you?
Marketplace-to-accounting integrations pull your settlement data in and can post a summary journal that splits gross sales, fees and refunds automatically. That saves the manual entry, and it’s a real help once the mapping is set up.
What they leave is the judgement. You still confirm the VAT treatment on each fee, apply the reverse charge where it’s due, handle period-end reserves, and check that the posted journal actually equals the bank deposit. The integration is good ecommerce payout bookkeeping plumbing, but it isn’t the review.
Why does this go wrong so often?
The payout looks like a sale. It’s one clean number in your bank, it arrives on a schedule, and it’s tempting to treat it as revenue and move on. That single shortcut is behind most of the mistakes above.
The fix is boring and reliable: record gross, expense the fees, get the VAT right, reconcile every settlement. It’s fiddly at volume, which is why sellers hand it to accountants who work with marketplace sellers once the settlements stack up. Knowing how to record marketplace payouts is one thing; doing it accurately every fortnight while you run the business is another.
How Sleek helps with marketplace fees accounting
Sleek’s UK accountants work in settlement reports every day, so your gross sales, fees, refunds and reverse charge are recorded correctly and your VAT position reflects what you’ve actually sold. A qualified accountant reviews the numbers, AI does the heavy lifting on the data, and you see every step. If your books have been running on payouts, that’s fixable, and the sooner it’s caught the smaller the correction.
Been recording payouts as income for a year?
FAQs on marketplace fees accounting
Are marketplace fees an allowable expense?
Yes. Referral, fulfilment, advertising, subscription and payment fees are ordinary business costs, so they’re allowable and reduce your taxable profit. The catch is that you can only claim them if you record them, which you can’t do if you only book the net payout.
Does the VAT threshold use gross sales or my payout?
It uses your gross sales. The £90,000 registration threshold (in force since 1 April 2024 and unchanged for 2026/27) is measured on taxable turnover over any rolling 12 months, before the platform’s fees come out. Judging it by your payouts can leave you registering late.
How do I record a refund that landed after the payout?
Post it to the period the refund was actually credited, and match it to the original sale. If the refund falls in a later settlement or a later year, it reduces income and output VAT then, not when the original sale happened. Keeping that link is what makes your marketplace payout reconciliation hold up.
What about money the platform is still holding at year end?
Any reserve or unpaid settlement balance at your balance sheet date is owed to you, so it belongs in your accounts as a debtor even though it isn’t in your bank yet. Recording it keeps the related sales in the correct year. Miss it and your year-end turnover is understated.
Do the marketplace integrations do the bookkeeping for me?
They do the data entry, not the judgement. An integration can split and post your settlement automatically, but you still confirm the VAT treatment, apply the reverse charge, and check the journal equals the bank deposit. Treat it as a tool that speeds up ecommerce payout bookkeeping, not a replacement for review.
How do I handle sales in euros or dollars?
Record each sale in sterling at the exchange rate on the sale date, then treat the difference against the platform’s conversion rate as a foreign exchange gain or loss. For VAT, convert using an acceptable rate such as HMRC’s published period rate. Don’t let currency movements land inside your turnover.
I've been recording payouts as income for a year. What now?
It’s correctable, and you’re not the first to do it. Pull your settlement reports for the year, restate gross sales and each fee category, then recheck your VAT position, since understated turnover may change whether and when you should have registered. An accountant can rework a year of settlements and file any corrections, so the fix is a job of work rather than a crisis.
Still have VAT, bookkeeping and accounting questions? Those are the ones worth asking before your next return.
