Your Amazon Settlement Report, Line by Line

Amazon’s settlement report does not use accounting words. It uses Amazon’s own internal names, and nobody ever explains them. So sellers open the file, see “Principal”, “ShippingChargeback” and “Current Reserve Amount”, and close it again. One of those three does not mean anything like what it sounds like.

Here is what each line actually means, in plain English. If you want the wider picture first — what a settlement is and how to download it — start with your Amazon payout isn’t your sales, then come back to this as a reference.

Throughout, money coming in to you is positive and money going out is negative. This covers the entries on most files rather than every transaction code Amazon can produce: reports vary with your account, your marketplaces and the services you use.

Money coming in

Product sales — what customers paid for the goods themselves, before Amazon takes anything. Amazon’s own name for this is Principal. Note that this is the product price charged during the period, not your accounting turnover: refunds and discounts sit on their own lines below.

Whether Principal includes VAT depends on a setting. If Amazon’s VAT Calculation Service is switched on, Principal is the price excluding VAT and the VAT appears on its own Tax line. If it is not, there is no Tax line and Principal is the gross amount the buyer paid, with any VAT still inside it. Check which of the two your file looks like before doing anything with the number, because the same sale reports differently under each.

Either way, do not treat Principal as your total sales or as the figure for a VAT return. Shipping, gift wrap, promotions, refunds and any marketplace VAT treatment sit on other lines and all affect the answer.

Shipping and gift wrap charged — postage and gift wrap the customer paid on top of the product price. In the file these are simply Shipping and GiftWrap, with the VAT on the postage as ShippingTax. Despite the names, this is money coming in: the customer paid you for postage. It is not what posting the parcel cost you, which is either an FBA fee or, if you bought the label through Amazon, the ShippingChargeback line further down. Mixing those two up is one of the easiest mistakes to make in this file. Whether you see anything here depends on how the order was fulfilled: it is common on orders you ship yourself, and usually absent on Prime orders where the customer paid no postage.

Reimbursements from Amazon — money Amazon pays back when it loses or damages your stock, or when a customer is refunded and never returns the item. It is a recovery, not a sale, and it should not be treated as turnover.

It is also not automatically profit. What the entry should be depends on what was reimbursed: compensation for lost stock relates to inventory you have already paid for, while a refunded fee reverses a cost you were charged earlier. Posting the lot to a single “other income” account will flatter your results.

If this line is zero or close to it, that is worth investigating rather than celebrating. Amazon does not automatically reimburse every eligible loss, and the deadlines vary by claim type — some run from the date of the report, others from the date of a refund or a removal order. Checking inventory and returns reports regularly matters more than knowing any single deadline.

Money going out

Promotions and discounts — money knocked off the price: vouchers, Lightning Deals, multi-buy offers. This sits separately from refunds because nothing came back; the sale happened at a lower price. Most promotions are funded by you, though some are funded or subsidised by Amazon, so it is worth knowing which you have signed up to.

Refunds to customers — the item came back, or the customer was refunded. The product price goes back out, and Amazon returns the referral fee less a refund administration fee — the lesser of £5 or 20% of that referral fee. A refund therefore costs you twice: the lost sale, and the amount Amazon keeps.

On FBA orders it generally costs you a third time. The original fulfilment fee for picking, packing and posting the item is normally not returned, because Amazon did that work whether or not the customer kept the goods. So a returned FBA order usually leaves you without the sale, without the refund administration fee and without the fulfilment fee you already paid — before the cost of getting the unit back into saleable condition. Further return-related charges can apply depending on the category and the circumstances.

Amazon referral fees — Amazon’s commission on each item sold. The rate depends on the product category, and in some categories on the selling price. Many categories are 15%, consumer electronics and computers are lower at around 7%, and furniture is banded — 15% on the first £175 and 10% above that. Most categories also carry a minimum referral fee. Amazon applies the rate to the total sales price of the item, which includes any delivery and gift-wrapping the customer paid, not just the product price. Rates and categories do change, so check the category assigned to your product against Amazon’s current schedule rather than relying on a figure you read once.

This is the line most worth checking. If a product sits in the wrong fee category it may be paying more than it should. Check the assigned category against Amazon’s current fee schedule and raise it if it looks wrong — though a miscategorised product does not automatically mean past charges will be refunded.

FBA fulfilment fees — the per-unit charge for Amazon picking, packing and posting an order from its warehouse. It is set by the product’s category, size tier and shipping weight rather than its selling price, which is why two products at very different prices can pay exactly the same fee, and why the charge hurts cheap items hardest.

Category comes into it indirectly. Low-price FBA rates apply below certain price points and those points differ by category, while apparel and some other categories are treated separately again. Size and weight set the fee, but what the product is can decide which rate card it sits on.

Amazon measures and weighs units itself to decide the size tier, and it sometimes gets it wrong. If a fee looks out of line with the product, request a remeasurement.

Postage labels bought through Amazon — where you fulfil the order yourself but buy the label through Amazon’s Buy Shipping, or you are on Seller Fulfilled Prime. This appears as Shipping Label Purchase, usually as its own transaction rather than an order fee, and on the summary page it sits under delivery services. It is a real cost: you bought postage.

ShippingChargeback is not this, despite the name, and it is the entry in the whole file most likely to be misread. It belongs to FBA orders. When a buyer pays for delivery on an FBA order, Amazon credits that delivery charge to you as income on the Shipping line, then takes the same amount straight back here — because Amazon did the shipping, not you. The two cancel out.

So it is a reversal of delivery income, not a fee and not postage you bought. Counted as an Amazon charge it inflates your fee total and overstates your sales by the same amount; the right place for it is against the delivery income it cancels. And if you see ShippingChargeback on a file, that is a sign of FBA, not of self-fulfilment.

Storage, removal and disposal fees — rent for stock sitting in Amazon’s warehouse, plus the cost of getting it back or having it destroyed. Storage rates rise sharply in the last quarter of the year.

Watch for the aged inventory surcharge, and do not assume it only bites after a year. On Amazon’s current UK schedule it can start once stock has been in a fulfilment centre for more than 241 days, with steeper rates beyond 270 days and again past a year. Some categories, including clothing, footwear and luggage, sit outside the first band.

Be careful with figures you find online here. The US threshold is 181 days, not 241, and guides written for US sellers circulate widely. Check Amazon’s current UK fee schedule rather than trusting any single number, including this one. What you pay depends on the age and the characteristics of the stock.

Inbound shipping and placement fees — what Amazon charges to get stock into its network, including the placement fee for sending a shipment to one fulfilment centre instead of splitting it across several.

Advertising — Sponsored Products and similar campaigns. There is an important limitation here. ACoS is advertising spend divided by advertising-attributed sales, and the settlement does not contain attributed sales, so you cannot calculate ACoS from this file. You can calculate advertising spend as a percentage of total sales, which is a useful broad signal — that measure is TACoS, total advertising cost of sales — but it is a different number from ACoS and should not be called by its name.

Seller subscription — Amazon offers two plans: Professional at £25 a month excluding VAT, and Individual at £0.75 per item sold excluding VAT. On the subscription alone the crossover is 34 items: 33 items on the Individual plan costs £24.75 and 34 costs £25.50, against a flat £25 for Professional. So Individual is cheaper at 33 items or fewer a month and Professional from 34 upwards — though Professional also carries tools and features that can justify it at lower volumes.

VAT on the fees themselves

Since August 2024 Amazon has invoiced UK-established sellers through its UK branch, which means most seller fees now carry 20% UK VAT rather than falling under the reverse charge as they used to. That applies whether or not you are VAT registered, because it is Amazon charging you VAT on a service it has supplied to you.

What differs is what you can do about it. If you are VAT registered you may be able to reclaim that VAT as input tax on your return, subject to the normal recovery rules and to holding a valid VAT invoice — Amazon’s fee invoices are in Seller Central’s Tax Document Library. If you are not registered, it is simply a cost, so where VAT is charged your Amazon fees are dearer than the headline rates suggest and none of it comes back.

It is not uniform, though. Fulfilment fees on orders shipped internationally can be zero-rated and arrive on a separate invoice. The invoice settles the treatment, not an assumption, which is why VAT for UK Amazon and Shopify sellers says to work from the fee invoices rather than the settlement report.

Lines that are neither income nor cost

These affect what lands in your bank, but they are neither income nor an expense. Treating them as either will distort your figures.

Reserve, held back or released — funds Amazon is withholding from your available balance, often to cover potential refunds, chargebacks or other account obligations. It is still your money — an amount owed to you that Amazon is holding — but it is not available cash yet and it is not new income. It is common for newer accounts and after a jump in sales, and it is usually released in a later settlement, subject to Amazon’s reserve policies.

For bookkeeping, a reserve movement is a timing difference, not a sale or an expense. The underlying transactions still belong in the period they occurred. This matters most for sellers whose records are built only from bank receipts — they end up recognising income when Amazon chooses to pay, rather than when they sold anything.

It is also one of the most common reasons a payout looks wrong. Before assuming something is missing, check the reserve.

VAT collected or accounted for by Amazon — on certain transactions Amazon is the deemed supplier under marketplace VAT rules and accounts for the VAT itself. This does not mean every Amazon sale falls outside your own VAT reporting. Which transactions Amazon handles depends on where you are established, where the goods are when sold, whether they are being imported, and the nature of the sale.

The practical point: you need to know which of your sales Amazon accounted for and which remain yours. That depends on your circumstances and where your stock sits, not simply on where you are.

Two percentages, two different bases

There is no single denominator behind every percentage you will see, which is why two of them can disagree without either being wrong. Our settlement checker measures fees and advertising against net sales — after refunds and promotions — because that is the sales figure the business actually kept, and it measures the refund rate against gross sales, because that answers a different question: what proportion of what I sold came back?

Other measures use other bases again. ACoS divides ad spend by advertising-attributed sales; TACoS divides it by total sales; a referral fee is worked out per item on that item’s own total sales price, including any delivery and gift wrap, at the moment of the sale. None of these is the period total that a reporting percentage is built from.

So before comparing any two percentages, check what each one is a percentage of. A ratio with an undefined denominator tells you very little.

So two percentages on the same screen can be measured against different totals. They are not inconsistent; they answer different questions.

A worked example

Here is a simplified settlement. The figures are illustrative.

Simplified, and excluding VAT adjustments, reserves and timing differences.

So is the seller making £6,100? Not even close. Nothing above includes what the stock cost. And if the seller is VAT registered the VAT on those sales still has to be dealt with — either as output tax the seller accounts for, or by Amazon where the marketplace rules make it the deemed supplier.

What is not in the report at all

A settlement report is a record of what Amazon charged, collected and paid out. It is not a profit and loss account. It does not show your cost of goods sold, your gross or operating profit, the stock you are holding, what you owe suppliers, your VAT liability, or any of the costs of running the business that Amazon has nothing to do with.

Two absences matter most.

What your stock cost you. There is no purchase price, no freight, no duty anywhere in the file. This is why a settlement can tell you precisely where Amazon’s money went and still cannot tell you whether you made a profit.

Postage you buy outside Amazon. If you fulfil your own orders on your own courier account, or you pay for boxes and labels, none of it appears here. For a seller-fulfilled business this can be the largest cost of all, and the payout will look far healthier than the business really is.

Understanding your settlement is the first step

Read one settlement properly with this page open and you will know more about where your money goes than most sellers ever find out. Three things are worth checking every time: whether reimbursements are being claimed, whether any product is paying the wrong referral rate, and whether aged inventory charges have started.

You can run your own file through our free Amazon settlement checker. It groups the lines, reconciles the total to Amazon’s payout and shows what was deducted. Nothing is uploaded — the file is read in your own browser and never leaves your device.

Next: if your figures still do not line up, see why your Amazon payout does not match your sales report.

Two of the lines above need more than a definition. What the stock cost you is covered in stock and cost of goods sold, and the VAT side in VAT for UK Amazon and Shopify sellers.

Knowing what Amazon charged is not the same as knowing whether the business works. That needs the settlements reconciled against your sales records, purchase invoices, stock and VAT. If you would like someone to look at your figures properly, book a consultation.