Is platform and payment fees
tax deductible?

Yes. Commission and fees charged by selling platforms and apps, such as marketplaces, delivery apps and booking sites, and payment processing fees, are allowable costs of making your sales (GOV.UK; SA103F notes). Your income is the full amount customers paid, before the platform's fees, and platforms now report sellers' income to HMRC (GOV.UK).

If you sell through a marketplace, drive or deliver through an app, or take bookings through a platform, the platform takes a cut. That cut is a cost of your sales and allowable. The common mistake is to declare only what reached your bank account, which understates your turnover and, since platforms began reporting to HMRC, is increasingly likely to be noticed.

Is platform and payment fees tax deductible?

The HMRC rule

Bank, overdraft and card charges, interest on business loans, hire purchase interest and leasing payments are allowable. Repayments of the loan itself are not. Interest on loans has its own quarterly-update field, interest, separate from these charges. The rule comes from Legal and financial costs, Self-employment (full) notes, SA103F.

The SA103F notes include commissions in cost of goods, box 17, and bank and card charges in box 26 (SA103F notes). Only business costs are allowable, and they must be incurred wholly and exclusively for the business (expenses overview). Digital platforms must collect and report information about sellers' income to HMRC (selling through a digital platform).

When you can claim it

• Marketplace commissions and listing, transaction and final value fees.
• Delivery and ride-hailing app service fees deducted from your earnings.
• Booking platform commissions for accommodation, lessons or services.
• Payment processing fees, promoted listings and seller subscriptions.

When you cannot

• Fees on personal sales of your own unwanted belongings, which are not a trade.
• Refunds and chargebacks as extra expenses where your sales already exclude them.
• Fees you have already netted off turnover, a second time.
• Personal subscriptions to the same platform, such as a shopping membership.

What to claim instead

If you sell occasionally and your gross trading income is £1,000 or less, the trading allowance means you do not need to declare it. Above that, you can claim either your actual expenses, including platform fees, or the £1,000 allowance, whichever is better.

How to decide if you can claim it

1. Was it for the business? A cost is only allowable if you incur it wholly and exclusively for the business. If it also serves a personal purpose that cannot be separated, such as clothing that keeps you warm or a meal that keeps you going, HMRC disallows it.
2. Is part of it personal? Where a cost has a business part you can identify, such as the business calls on a phone bill or the business miles in a car, you claim that part and leave the rest out, on a reasonable basis you can explain.
3. Is it a running cost or something you keep? It is a running cost, so on the cash basis it counts when you pay it and on traditional accounting when you incur it. Nothing about it needs spreading over later years.
4. Is there a specific rule? For platform and payment fees, the deciding rule is bank charges, interest and finance costs: bank, overdraft and card charges, interest on business loans, hire purchase interest and leasing payments are allowable. Repayments of the loan itself are not. Interest on loans has its own quarterly-update field, interest, separate from these charges.

Worked example: an online seller

A jewellery maker sells £18,000 through an online marketplace. The platform takes £1,900 in transaction, listing and payment fees, and she pays £240 for promoted listings. Her turnover is £18,000, not the £15,860 that reached her bank, and her platform costs of £2,140 are allowable expenses.

Gross, not net

Platforms usually pay you after deducting their fees, so the amount in your bank is lower than your sales. Record the gross sale as income and the fees as an expense. The profit is the same either way, but gross figures are what your turnover means, and they decide whether you pass the VAT registration threshold and the Making Tax Digital income threshold.

Platforms report to HMRC

Under rules that started with the 2024 calendar year, digital platforms collect sellers' details and report their income to HMRC each January. That includes online marketplaces and platforms for services, transport and accommodation. Small sellers of goods with fewer than 30 sales and less than about €2,000 of sales in a year are excluded. HMRC compares these reports with tax returns.

Selling belongings versus trading

Selling your own unwanted things is not trading, and there is usually no tax to pay. Buying items to resell at a profit, making things to sell, or offering services through an app is trading. If you are trading, you declare the income and claim the platform fees and other costs.

Delivery and ride-hailing apps

Couriers and drivers working through apps are usually self-employed. The service fee or commission the app deducts is an allowable cost, and your income is the full fare or delivery fee before it. Vehicle costs, phone costs and equipment such as delivery bags are claimed separately.

Refunds, chargebacks and returns

Refunds you give reduce your sales, and chargebacks are lost income. Record them consistently: either deduct them from turnover or treat them as costs, but not both. Platform fees that are refunded to you when a sale is cancelled reduce your expenses.

Where it goes

Sales commissions can go in box 17, cost of goods, while payment processing fees go in box 26, financial charges. Seller subscriptions and promoted listings fit other business expenses, box 30, or advertising, box 24. Pick a consistent place for each fee.

Where it goes on your return and in MTD

For a sole trader, the allowable part goes under bank, credit card and other financial charges (SA103F box 26 on the full self-employment pages). Under Making Tax Digital for Income Tax, it goes in the same category of your quarterly update, which is the category TapTax files it under when you record the cost.

If your turnover was under £90,000, you can use the short self-employment pages (SA103S), which ask for a single figure for total allowable expenses rather than a box-by-box breakdown, and the full pages let you give just a total in box 31 too. The category still matters for your own records and for Making Tax Digital, where each quarterly update uses the same categories unless you choose to send one consolidated figure.

Most sole traders now use the cash basis, the default from the 2024/25 tax year, which counts a cost when you pay it. On traditional accounting you count it when you incur it, and equipment you keep goes through capital allowances rather than expenses.

How much an allowable cost saves

The value of a deduction is the tax it removes from your profit, not the cost itself. At the basic rate a sole trader saves 26p for every pound of allowable expense, at the higher rate 42p, and in the personal allowance taper between £100,000 and £125,140 as much as 62p. Landlords pay no Class 4 on rental profit, so they save 20p or 40p.

Records to keep

Keep the platform's annual or monthly seller statements, which show gross sales, fees and payouts, and reconcile them to your bank. The same figures are what the platform reports to HMRC.

From 6 April 2026, sole traders and landlords with qualifying income over £50,000 keep these records digitally and send quarterly updates under Making Tax Digital, falling to £30,000 from April 2027 and £20,000 from April 2028. The MTD requirement checker shows when it applies to you.

Common mistakes

• Declaring only the net payouts as income.
• Deducting platform fees from income and also claiming them as expenses.
• Assuming sales through an app do not need to be declared.

Related expenses

This item sits in the bank, credit card and other financial charges category, alongside bank charges and mortgage arrangement fees. The A to Z of expenses answers the same question for every other cost.

TapTax sorts each cost into the right category as you record it, applies the business share where you set one, and keeps the receipts with the figures, ready for your quarterly updates and final return.