eBay Profit Calculator UK

How This eBay Profit Calculator Works

The Payout Method Explained

When you sell an item on eBay, the buyer pays a total amount (item price + postage). eBay then deducts their fees — the final value fee, per-order fee, regulatory operating fee, and VAT on those fees — and sends the remainder to your bank account. This remainder is your payout, shown as "Order earnings" in eBay Seller Hub.

Because the payout has all eBay fees already removed, you do not need to know or calculate fee percentages. You simply need to subtract your remaining costs from the payout to find your real profit. Those remaining costs are: what you paid for the item, what you paid for postage, and any VAT you owe to HMRC.

Understanding Your Supplier Invoices and VAT

Most UK suppliers, wholesalers, and courier companies are VAT registered. When they invoice you, they charge 20% VAT on top of the net price. Some invoices show this clearly as two separate lines (e.g. net price £2.30 + VAT £0.46 = total £2.76), while others show a single total that already includes VAT.

This matters because the amount on your supplier's invoice is the real cash leaving your bank account. Whether you are VAT registered or not, you pay the full invoice amount including VAT to your supplier. The difference is what happens next:

• VAT registered seller: You can reclaim the VAT your supplier charged you from HMRC via your VAT return. So your effective item cost is the ex-VAT amount. But you also owe output VAT on your sales.
• Non-VAT registered seller (under £90,000 turnover): You cannot reclaim any VAT from HMRC. The full invoice amount including VAT is your real cost. The VAT portion is a dead cost that directly reduces your profit.

Use the "Excluding VAT" or "Including VAT" toggle above each cost field to match how your supplier or courier shows the price on their invoice. The calculator handles the conversion automatically.

The Payout ÷ 6 VAT Method (VAT Registered Sellers)

If you are VAT registered at the standard 20% rate, your eBay payout includes VAT. To extract the VAT portion from a VAT-inclusive amount, you divide by 6. This is the standard UK method used by accountants and bookkeepers everywhere.

The maths behind it: if the net amount is 100%, then VAT at 20% makes the gross 120%. The VAT portion (20%) divided by the gross (120%) equals 1/6. So dividing any gross amount by 6 gives you the VAT.

What If I Am Not VAT Registered?

If your taxable turnover is below £90,000 per year, you are not required to register for VAT. Toggle the VAT option off in the calculator above. The key difference is that you do not charge output VAT to your buyers, and you do not owe any VAT to HMRC.

However — and this is the part many sellers miss — your suppliers and courier companies are almost always VAT registered themselves. They charge you 20% VAT on everything you buy from them, and it will be on their invoices. Because you are not VAT registered, you cannot reclaim this VAT from HMRC. It becomes a dead cost that eats into your profit.

For example, if a wholesale item costs £2.00 ex VAT, you actually pay £2.40 out of pocket to the supplier. A VAT registered seller also pays £2.40 but can reclaim the £0.40 from HMRC. You cannot. The same applies to postage — if your courier charges £2.50 ex VAT, you pay £3.00 and cannot get the £0.50 VAT back.

UK VAT Registration Threshold for eBay Sellers

The current UK VAT registration threshold is £90,000 in taxable turnover over any rolling 12-month period. This was increased from £85,000 in April 2024. If your total eBay sales (across all accounts and shops) plus any other business sales exceed this figure, you must register for VAT with HMRC.

Important: the threshold is based on turnover (total sales revenue), not profit. A seller with £95,000 in sales but only £10,000 profit must still register. Once registered, you must charge VAT on all sales, file quarterly VAT returns, and keep digital records under Making Tax Digital (MTD) rules.

The deregistration threshold is £88,000 — meaning if your turnover drops below this figure, you can apply to cancel your VAT registration. Please note that VAT thresholds are reviewed by the government periodically and may change. Always check the latest figures at gov.uk/vat-registration.

When Should I Use This Calculator vs the Fee Calculator?

Use this profit calculator after you have sold an item and want to check your real profit from the actual payout amount. Use our eBay Fee Calculator before listing an item when you want to estimate fees and profit based on a planned sale price. Together, they cover both stages of the selling process: planning your price, and checking your results.

Common Reasons Your Profit Is Lower Than Expected

• Forgetting supplier VAT (non-VAT registered sellers) — Your suppliers charge you 20% VAT on everything. If an item costs £3.00 ex VAT, you actually pay £3.60. Many sellers forget this when calculating profit.
• Forgetting output VAT (VAT registered sellers) — On a £12 payout, you owe £2 to HMRC. Many sellers see £12 in their bank and assume that is their revenue — but £2 of it belongs to HMRC.
• Underestimating postage costs — Include the full cost including packaging materials, labels, and tape, not just the carrier charge.
• Not including packaging costs — Boxes, bubble wrap, and tape cost money. Add these to your postage cost figure.
• Ignoring multi-buy discounts you gave — If you offered a discount, the payout is lower than your standard price.
• Returns and refunds — If the buyer returns the item, your payout is reversed. Factor your return rate into pricing decisions.

Tips for Improving Your eBay Profit Margins

• Buy stock in bulk — Lower per-unit item costs directly increase your profit per sale.
• Negotiate better postage rates — Compare Royal Mail, Evri, DPD, and Yodel. Even saving 20p per parcel adds up over hundreds of orders.
• Use the right eBay category — Some categories have lower final value fees than others. Listing in the correct category can save you money.
• Maintain Top Rated seller status — Top Rated sellers get a 10% discount on final value fees for Premium Service listings.
• Offer free postage and build it into the price — Listings with free postage rank higher in eBay search results, leading to more sales.