Short answer: if you have no VAT number, you pay 20% on top of every pound you spend on Amazon ads, and you never get it back. Amazon adds UK VAT to the ad bill of any UK advertiser without a VAT number. A UK KDP author can register for VAT voluntarily, even far below the £90,000 threshold, and then reclaim that 20%. With £1,000 of ads a month, HMRC keeps £2,400 a year that could stay with you.
For UK KDP authors, Merch on Demand designers and small sellers, from HMRC's own guidance and Amazon Ads' help pages, checked in October 2026. This is information, not tax advice: confirm your case with an accountant.
Work out what you lose with our free calculator
How much you lose each year
UK VAT is 20%. Without a VAT number, it is a pure cost on your ads:
| Ads per month | VAT per month | VAT per year |
|---|---|---|
| £300 | £60 | £720 |
| £1,000 | £200 | £2,400 |
| £3,000 | £600 | £7,200 |
Amazon won't tell you that this 20% can be recovered. Its help pages say it charges VAT to advertisers who "haven't provided a valid VAT/GST registration number", and leave the rest to "your tax advisor".
Why Amazon charges you 20%
Without a VAT number, Amazon treats you as a private consumer and adds the standard rate of your country. Amazon Ads' tax guide: Amazon "may be required to collect the standard rate of VAT/GST applicable to your country of residence or business establishment when a VAT/GST ID isn't provided."
Which Amazon company bills you depends on the marketplace your ads run on:
- amazon.co.uk: Amazon Online UK Limited, a UK company. It charges UK VAT.
- amazon.com, amazon.de and the others: an Amazon company outside the UK (Amazon Advertising LLC for amazon.com, for example). Without a VAT number, it adds UK VAT too.
Can a KDP author register for VAT?
Yes. Below £90,000 you are not forced to, but you can choose to. GOV.UK: "You can choose to register for VAT if your turnover is less than £90,000 ('voluntary registration')."
Your KDP royalties make this possible:
- They are paid by Amazon companies outside the UK (the KDP agreement names Amazon.com Services LLC, Amazon Media EU S.à r.l. and others; none is a UK company).
- So they are supplies made outside the UK. No UK VAT is due on them.
- The law covers exactly this case. Schedule 1, paragraph 10 of the VAT Act 1994 lets someone register when their supplies are "made outside the United Kingdom but would be a taxable supply if made in the United Kingdom". HMRC's Notice 700/1 (section 2.9) adds a condition: you must also receive taxable supplies from UK VAT-registered businesses. Ads on amazon.co.uk, billed by Amazon Online UK Limited with UK VAT, are such supplies.
Registering does not make you charge VAT on your royalties: they stay outside the UK. And the VAT on your ads becomes deductible, because those royalties would be taxable if made in the UK.
What changes once you are registered
- Add your VAT number to Amazon Ads. As a KDP author: Administration, Billing, Payment Settings, then the Tax info section.
- amazon.co.uk ads: Amazon Online UK Limited still shows 20% VAT on the invoice. You reclaim it on your VAT return.
- Ads on other marketplaces: Amazon normally stops adding VAT. You account for it yourself under the reverse charge: the same amount goes in as tax due and as tax reclaimed, on the same return (HMRC Notice 741A, section 5.2). Net cost: zero.
What it costs, and when it pays
Registering is not free. You send a VAT return to HMRC, usually every 3 months, and keep VAT records. Budget for software or an accountant.
Say that costs you £100 a month (our assumption, not an official figure):
| Ads per month | VAT reclaimed | Gain after £100 |
|---|---|---|
| £300 | £60 | −£40 |
| £500 | £100 | £0 |
| £1,000 | £200 | +£100 |
| £3,000 | £600 | +£500 |
Below about £500 of ads a month, registering costs more than it saves. Above it, the gap grows with every pound you spend.
The limits you need to know
Do not register for a refund of the past. Two HMRC rules reach back, both under conditions, and neither is automatic:
- A backdated registration. A voluntary registration can be backdated "by up to 4 years", if HMRC accepts the date (Notice 700/1, section 3.9). You then owe VAT on any UK sales you made since that date, you file a return for every period, and the date can never be changed afterwards.
- Pre-registration services. VAT on services received up to 6 months before your registration date can be reclaimed, under conditions (VAT Notice 700, section 11.3).
Either way, you need proper VAT invoices, and VAT that Amazon added without your VAT number is not automatically yours to reclaim. Whether any past ad invoice can be recovered is your accountant's call, not a promise. Count on the savings from now on.
If you sell to consumers yourself, you must charge VAT on those sales. Once registered, every UK sale you make yourself carries VAT. For a KDP author this rarely bites: printed books and e-books are zero-rated in the UK (VAT Notice 701/10), so a paperback sold at a book fair carries 0%. For an FBA seller who sells goods to consumers, it is a different story:
| Per month, prices unchanged | Not registered | Registered |
|---|---|---|
| Sales | £5,000 | £5,000, of which £833 VAT to pay |
| Ads | £1,200 (with VAT) | £1,000 (VAT reclaimed) |
| What is left | £3,800 | £3,167 |
That seller loses about £633 a month by registering. Registering pays when your income carries no VAT, which is the case of KDP royalties.
Merch on Demand: the same reasoning applies only if your Merch royalties, like KDP royalties, are paid by an Amazon company outside the UK. Check your Merch agreement with your accountant before you count on it.
Your foreign ad bills can push you over £90,000
Ads bought from Amazon companies outside the UK count toward your registration threshold. HMRC Notice 741A, section 5.7: the value of such services "must be added to the value of your own taxable supplies when determining whether you should be registered for UK VAT". And "even if you make no taxable supplies yourself, you may still be required to register".
Your royalties, made outside the UK, do not count. Your ads on amazon.com, amazon.de and the other foreign marketplaces do. At £2,000 a month on amazon.com, that is £24,000 a year toward the £90,000. Above £7,500 a month of ads billed from abroad, on average over 12 months, registration is no longer a choice.
Frequently asked questions
Does registering for VAT mean I charge VAT on my KDP royalties?
No. Your royalties are paid by Amazon companies outside the UK, so they are supplies made outside the UK and carry no UK VAT.
Will Amazon refund the VAT I already paid?
Only if your VAT registration covered the period of the invoice: Amazon asks for a valid VAT number and a registration certificate "showing that registration was active during the billing period" (Amazon Ads help, "Tax refunds"). Ads billed before your registration date are not covered.
Is the threshold still £90,000?
Yes, GOV.UK gives £90,000 of taxable turnover over the last 12 months, or expected in the next 30 days alone.
I spend £200 a month on ads. Should I register?
Probably not for this reason alone: you would reclaim £40 a month, less than a typical accountant's fee. Run your own figures in the calculator.
Before you decide
Work out what you lose with our free calculator: enter your monthly ad spend, see the VAT you pay each year and what registering would change. Then take the figure to your accountant.
Spending less on ads for the same sales helps too: see how much Sponsored Products ads cost and whether KDP authors can run Sponsored Brands ads. Authors elsewhere in Europe: Ireland, Sweden.
Sources
- VAT rates, GOV.UK
- Register for VAT (threshold, voluntary registration), GOV.UK
- VAT Notice 700/1: should I be registered for VAT?, sections 2.9, 3.9 and 5.2, HMRC
- VAT Act 1994, Schedule 1, paragraph 10, legislation.gov.uk
- VAT Notice 741A: place of supply of services, sections 5.2 and 5.7, HMRC
- VAT guide (Notice 700), section 11.3, HMRC
- Zero rating books and printed matter (VAT Notice 701/10), HMRC
- Submit a VAT Return, GOV.UK
- Amazon Advertising Agreement ("Amazon Contracting Party", "Elected Country"), Amazon Ads
- Understanding taxes and regulatory fees on your advertising invoice, Amazon Ads
- VAT on Electronically Supplied Services, Register your Tax ID and Tax refunds, Amazon Ads help
- KDP Terms and Conditions (the Amazon parties), Amazon KDP
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