CT600 for E-commerce Businesses: Complete Guide

Running an online shop through a UK limited company? This guide covers everything you need to know about filing your CT600 Corporation Tax return.

E-commerce Tax Basics

As an e-commerce company, you'll pay Corporation Tax on your profits:

Profit Level	Tax Rate
Up to £50,000	19%
£50,001 - £250,000	25% (with marginal relief)
Over £250,000	25%

These rates apply from April 2023 onwards.

Key Tax Areas for E-commerce

1. Revenue Recognition

Your turnover includes all sales:

Website sales
Marketplace sales (Amazon, eBay, Etsy)
Social media sales
Wholesale orders

Report gross sales in Box 145, before payment processor fees.

2. Payment Processor Fees

These are all deductible expenses:

Processor	Typical Fees
Stripe	1.4% + 20p (UK cards)
PayPal	2.9% + 30p
Square	1.75%
Shopify Payments	1.5% - 2%

3. Stock Valuation

Correctly valuing stock affects your tax bill significantly:

``` Opening stock £30,000 Purchases £200,000 Less: Closing stock (£45,000) Cost of sales £185,000 ```

Value stock at the lower of:

Cost (what you paid)
Net realisable value (what you can sell it for)

Calculating Your CT600

Box 145: Turnover

Report all sales revenue:

``` Website sales £280,000 Amazon sales £80,000 Etsy sales £15,000 Wholesale £25,000 Total turnover £400,000 ← Box 145 ```

Box 155: Gross Profit

``` Turnover £400,000 Opening stock £30,000 Purchases £200,000 Closing stock (£45,000) Cost of goods sold £185,000 Gross profit £215,000 ← Box 155 ```

Operating Expenses

Typical e-commerce expenses:

Category	Example Amount
Payment processing	£12,000
Platform fees	£8,000
Shipping/postage	£25,000
Packaging	£8,000
Marketing	£20,000
Web hosting	£2,000
Software subscriptions	£5,000
Staff costs	£40,000
Warehouse/storage	£15,000
Other	£10,000
Total expenses	£145,000

Box 165: Trading Profit

``` Gross profit £215,000 Less: Expenses (£145,000) Trading profit £70,000 ← Box 165 ```

E-commerce Specific Expenses

Fully Deductible

Platform and Processing:

Shopify/WooCommerce subscriptions
Payment gateway fees
Marketplace fees
SSL certificates
Domain registration

Fulfilment:

Shipping costs
Packaging materials
Warehouse rent
Pick and pack services
Returns processing

Marketing:

Google/Facebook ads
Influencer payments
Email marketing tools
SEO services
Photography

Technology:

Web hosting
Inventory management software
Accounting software
Customer service tools
Analytics subscriptions

Capital Allowances

Equipment purchases get tax relief:

Asset	Allowance
Computers	100% AIA
Camera equipment	100% AIA
Warehouse equipment	100% AIA
Delivery van	100% AIA

Annual Investment Allowance (AIA) is £1,000,000.

Multi-Channel Selling

If you sell across multiple channels:

``` Own website 40% of sales Amazon 35% of sales eBay 15% of sales Etsy 10% of sales ```

All channels are combined for:

Total turnover (Box 145)
Total cost of sales
Corporation Tax calculation

Keep separate records for management but combine for tax.

Drop Shipping Businesses

Drop shipping has specific considerations:

Revenue: Full sale price (what customer paid) Cost of sales: Supplier price (what you paid them)

Even though you never handle stock, record keeping is the same:

Customer order = Sale
Supplier payment = Purchase

Digital Products

Selling digital products (ebooks, courses, software):

Advantages:

No stock valuation needed
No shipping costs
Higher margins typically

Considerations:

Hosting costs still apply
Platform fees still apply
May have VAT complications for EU sales

VAT and E-commerce

VAT is separate from Corporation Tax but affects your figures:

If VAT registered (threshold £90,000):

Report turnover excluding VAT
Report expenses excluding VAT
VAT on purchases reclaimed separately

International VAT:

EU sales may require VAT OSS registration
US sales have sales tax considerations
Track by destination for compliance

Example: Complete E-commerce CT600

XYZ Online Ltd - Fashion Retailer

Year ended 31 March 2025

Description	Amount
Website sales	£180,000
Amazon sales	£45,000
Other sales	£25,000
Total turnover	£250,000
Cost of goods sold	£100,000
Gross profit	£150,000
Payment fees	£7,500
Shipping	£18,000
Packaging	£5,000
Marketing	£25,000
Platforms	£6,000
Other expenses	£18,500
Total expenses	£80,000
Net profit	£70,000

Corporation Tax at 19%: £13,300

Record Keeping Requirements

Essential records to maintain:

Sales data - All platforms and channels
Purchase invoices - Every stock purchase
Stock counts - Opening and closing
Bank statements - All transactions
Payment processor statements - Monthly downloads
Expense receipts - Everything you claim

Retention: Keep for at least 6 years.

Common Mistakes

1. Ignoring Stock at Year End

Wrong: Assuming stock is zero Right: Count and value all inventory (including in transit)

2. Using Net Sales

Wrong: Using PayPal payout as turnover Right: Use gross sales, fees are separate expenses

3. Missing Platform Fees

Wrong: Not claiming all marketplace fees Right: Track and claim all platform costs

4. No Expense Categorisation

Wrong: Lumping all costs together Right: Categorise expenses for accounts

When Using TinyTax

TinyTax helps e-commerce businesses:

Import trial balance from accounting software
Correct categorisation of income streams
Stock adjustment handling
Payment fees properly allocated

Need Help?

E-commerce businesses have specific tax considerations. TinyTax guides you through the CT600 process, ensuring all sales and expenses are correctly reported.

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