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How to avoid paying US tax from Amazon self-publishing (UK)

  • 2 min read
  • Last updated 29 Mar 2022

If you publish your book using Amazon self-publishing (UK), it’s automatically reported to the IRS (Internal Revenue Service – America’s version of HMRC). And as a result, they’ll automatically deduct 30% from your profits. 

Whilst all non-Americans experience this when signed up to Amazon KDP (Kindle Direct Publishing), it’s important to understand that you don’t have to pay as a UK citizen 

Steps to avoid the 30% tax for Amazon self-publishing (UK) 

First, you will need to get hold of one of two things:

  • An EIN 
  • An ITIN  

An Employer Identification Number (EIN) is used by the IRS to view employer tax accounts. It’s not too difficult to get hold of one and can be done from home. An Individual Tax Identification Number (ITIN) is a little more difficult to come by – and it takes a lot of admin. 

How to get an EIN? 

  • Call IRS on (1) 267-941-1000 – don’t forget that they are five hours behind us
  • You’ll need to provide some basic info
    • Your name
    • Your address
    • Details about your self-employed business
  • Explain that you’re not a US citizen and that you need to comply with the IRS withholding regulations
  • Take your EIN 
  • It will take approximately one month for this to be updated

How to remove the 30% withholding tax

To remove the 30% tax for your Amazon self-publishing (UK) account, you will need to login to your KDP account. You will need to update the ‘Tax Information’ section.

Following this, when you click on Tax Information, enter your EIN where it says, “Do you have a US TIN?”.

If you get an email back from Amazon explaining that it’s not gone through, don’t panic. The lag time from the IRS updating your records can take a while. Just try again in up to two weeks and it should be successful. 

What UK tax do I owe on my Amazon royalties?

This is pretty simple. Self-employed writers declare their income to HMRC by doing what’s known as a Self Assessment.

To do this, you complete it online by 5th October following any given tax year. 

You pay your tax bill via a tax return before the following 31st January. The taxes that you’ll have to pay are:

  • Income Tax
  • National Insurance

To calculate what you owe, just use our handy tax calculator.

Your situation

Outlined number oneOutlined number one
I am
Annual self-employed income
Self-employed expenses
?

Tax and profit

Outlined number two
  • Total earnings
    £50,000
    £1,000 tax-free Trading Allowance
    ?
  • Tax to pay
    £10,994
    £7,286 income tax
    £159 class 2 National Insurance
    £3,549 class 4 National Insurance
  • What you’re left with
    £39,006

How your income tax is calculated

When you’re self-employed, you have to pay your income tax and national insurance contributions yourself in your annual Self Assessment. Our calculator helps you quickly assess how much you owe.

However you may be eligible for a tax refund when:

  1. You already made tax payments for the year but your annual income ended up less than planned
  2. You have done things that qualify for a tax relief (made private pension contributions, given to charity, etc.)

In your case when you earn £50,000:

Income tax breakdown

You pay no income tax on first £12,570 that you make

You pay £7,286 at basic income tax rate (20%) on the next £36,430

National insurance contributions breakdown

No contributions on the first £9,568 that you make

You pay £3,549 in contributions (at 9%) on the next £39,432 that you make

You pay £159 in NI Class 2 contributions

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