It is lower than your sales, because the fees came out before it reached you. It is also higher than your taxable turnover, because it still contains the VAT your customers paid.
Two errors, pulling opposite ways, which is exactly why they cancel out just enough to look plausible on a bank statement. Work down from what customers actually paid instead.
Open your Shopify Finances summary for the period and work through it. Nothing you type is sent anywhere.
From your Shopify Finances summaryfor the period — the sales figures, not the payouts. Include VAT if you charge it; we'll separate it out.
Needed for the per-order pence, which flat percentages miss
Filled in from Shopify's published rate for a standard domestic card, checked 02-08-2026. International and Amex cards cost more, and rates change — if your statement says something different, change it here and trust the statement.
This works from the figures you enter and is a guide, not advice on your own position. Nothing you type here is sent anywhere or stored.
No, and it is wrong in two directions at once. The payout has already had processing fees, refunds, chargebacks, app charges and any reserve taken out of it, so it is lower than your sales. But it still contains the VAT your customers paid, which was never yours, so it is also higher than your taxable turnover. Booking the bank figure as sales therefore misstates both your income and your VAT return.
Shopify bills UK sellers through its Irish company, so a VAT-registered seller sees no UK VAT on the invoice and accounts for the tax themselves under the reverse charge. On £1,285 of fees in a quarter at 20%, that is £257 added to the VAT you owe and £257 to the VAT you reclaim — nil in cash if you are fully taxable, but both entries belong on the return, along with the value of the fees in your totals of sales and purchases. Plenty of sellers leave it off on the assumption that card processing is an exempt financial service. HMRC's guidance says the opposite: following the Bookit and National Exhibition Centre cases, fees charged for card processing services that let a customer pay by debit or credit card are taxable and do not qualify for the payments exemption. If you are not VAT registered, Shopify charges VAT on its fees and you cannot reclaim it, so it is a straight cost.
Your taxable turnover — the value of your sales excluding VAT — not the amount paid into your bank. Because the payout is net of fees, it is smaller than your sales, so a seller watching the bank balance will always reach the threshold later than they actually did. That is the common route to registering late and being assessed for VAT that was never charged to customers.
Yes. A refund reduces the supply, so it reduces both your sales figure and the VAT on it. A chargeback fee or dispute fee is different: that is a cost of doing business rather than a reduction in what you sold, so it comes off your profit but not off your VAT.
A reserve is a timing difference, not a cost. The sale has happened, it belongs in your accounts and on your VAT return for the period in which it was made, and the cash simply has not been paid over yet. Treating a reserve as though the sale had not happened is a common way to understate a quarter.
We checked these rather than relying on memory. Every figure and deadline above comes from HMRC directly — go and read them yourself if you'd like to.
Last reviewed 02-08-2026. Tax rules change — if you're reading this long after that date, check the source.
Reconciling payouts every quarter is exactly the sort of work that eats an evening and still leaves you unsure. Your own accountant does it once, properly, and you stop wondering whether the VAT return is right.
See what that costs →Selling on more than one platform? See the same problem on Amazon and when Shopify sales tip you over the VAT threshold.
