Note: this article is for UK authors, who are using Amazon KDP and/or other distributors directly (not through a publisher).
As a UK author selling books in the US market (e.g. Amazon), understanding your tax obligations might seem daunting at first. However, with the right knowledge, you can efficiently manage your US earnings and potentially reduce your tax burden. This guide will walk you through the steps to handle your US royalty income properly.
If you are publishing through a publisher (for example, via us at UK Book Publishing) and the publisher receives the royalties directly, then you do not need to submit a W-8BEN, as the publisher (not you) is considered the beneficial owner of the royalties. You can therefore skip this article. However, if you are a UK author using Amazon KDP and/or other distributors directly, this article is for you.
The Basics
If you’re earning royalties from US book sales, you’ll need to complete a W-8BEN form. Don’t let this intimidate you – it’s simply a tool to allow you to prove to the US authorities (the IRS) that no tax (or a reduced rate of tax) is due to be withheld.
Without a W-8BEN, you cannot claim reduced or zero withholding tax rates under the US-UK tax treaty. This means a default 30% withholding tax will be applied to your royalties, even if you qualify for a lower rate.
Most US payers will not process payments without a valid W-8BEN or W-8BEN-E on file. This makes providing the form essential if you want to receive payments.
If you’re publising only via Amazon KDP, then this process is simpler. More on that in a moment.
Important Update: You no longer need to obtain a US tax ID (ITIN or EIN). Instead, you can now use your own country’s tax ID when making a claim.
Understanding Beneficial Ownership
Before diving into the W-8BEN form, it’s important to understand what being a “beneficial owner” means, as this affects which form you’ll need to complete.
The key distinction is who has the legal right to control and use the income. If it’s you personally, you’re an individual beneficial owner. If it’s your company (not including sole traders), the company is the beneficial owner.
Individual Beneficial Owner
- You’re an individual beneficial owner if you personally receive the royalty income from your books, including if you’re a sole trader.
- Example: You publish under your own name or pen name, and the royalties are paid directly to you.
- Individuals need to complete the W-8BEN form.
Company Beneficial Owner
- Your company is the beneficial owner if the company owns the rights to your books and receives the royalties.
- Example: You’ve set up “Big Farmer Publishing Ltd” which holds your book rights and receives payments.
- Companies need to complete the W-8BEN-E form (note the ‘-E’ suffix).
Amazon KDP Authors
If you’re publishing exclusively through Amazon KDP, the process is now simpler:
- Complete an online tax questionnaire with KDP:
- Go to your KDP account page.
- Under “My Account,” click Tax Information.
- Click Complete Tax Questionnaire. If you’re updating your tax information, click Update/Access Tax Profile.
- Amazon’s online help page is here.
- Follow the online instructions provided.
- When prompted for a tax ID:
- For individuals (including sole traders): Enter your National Insurance Number or Unique Taxpayer’s Reference (UTR).
- For companies: Enter your VAT number
Non-Amazon Distributors
If you’re using distributors other than Amazon KDP, you’ll need to follow the traditional W-8BEN process outlined below.
What is the W-8BEN Form?
The W-8BEN form is your ticket to reducing US tax withholding on your royalties. As a UK resident, you’re entitled to beneficial tax treatment under the US-UK tax treaty, which can reduce the withholding rate on your royalties to 0%. Which means you need to complete and submit this form to retain your US royalties.
OK, now that we know what benefical owner means, and we have a basic understading of the W-8BEN form, you need to choose the instructions below based on whether you or your company is the beneficial owner:
Step-by-Step Guide for Individual Authors (W-8BEN)
If the beneficial owner is an individual author or sole trader (not company), follow these steps carefully (or, if your company is the beneficial owner, scroll down to the section named ‘Step-by-Step Guide for Companies‘).
Download the W-8BEN form from this page, under ‘Current revisions’, or use these links:
Part I – Identification
- Line 1: Enter your full legal name as shown on your passport
- Line 2: Write “United Kingdom” as your country of citizenship
- Line 3: Enter your full UK residential address (no PO boxes)
- Line 4: Enter your mailing address only if different from Line 3
- Line 5: Skip this unless you have a US Social Security Number
- Line 6: Enter your UK Unique Taxpayer Reference (UTR) if you have one
- Line 7: Optional – you can enter your National Insurance Number
Part II – Treaty Benefits
- Line 9a: Write “United Kingdom”
- Line 9b: Leave blank unless you have an ITIN
- Line 10: Complete as follows:
- Write “12” for the treaty article
- Enter “0%” for the withholding rate
- Write “The beneficial owner is a resident of the United Kingdom and meets the terms of the treaty article”
Part III – Certification
- Sign the form
- Print your name clearly
- Write the current date
- Add “Individual Author” as your capacity to sign
You must renew your tax information every three years using the same form.
Step-by-Step Guide for Companies (W-8BEN-E)
Companies (not sole traders) need to complete the W-8BEN-E form.
Download the W-8BEN-E form
Part I – Company Identification
- Line 1: Enter your company’s legal name
- Line 2: Write “United Kingdom”
- Line 3: Select “Corporation” or appropriate entity type
- Line 4: Enter your company’s registered UK address
- Line 5: Enter business mailing address if different
- Line 6: Enter your company’s UTR
- Lines 7-8: Skip unless specifically relevant
Part II – Treaty Benefits
- Line 14a: Write “United Kingdom”
- Line 14b: Complete as follows:
- Write “12” for treaty article
- Enter “0%” for withholding rate
- Explain that the company is the beneficial owner and UK resident
- Line 14c: Check applicable LOB provision (usually “Company meeting ownership and base erosion test”)
Part III – Certification
- Sign as an authorized representative
- Print your name and title (e.g., “Director”)
- Enter the date
- Include company position/title
- The form remains valid for three years unless your circumstances change.
Practical Tips
- Keep copies of all submitted forms
- Mark your calendar for form renewal dates
- Track your US earnings separately for UK tax purposes
- Consider working with a tax professional if your situation is complex
When to Seek Professional Help
While most authors can handle their US tax documentation independently, consider getting professional advice if:
- You’re unsure about your eligibility for treaty benefits
- Your publishing income involves complex international arrangements
- You’re considering setting up a company structure
- You need help understanding which tax reference numbers to use
Final Thoughts
Managing your US tax obligations has become simpler with these recent changes, particularly for Amazon KDP authors. Taking the time to set everything up correctly will ensure you maximize your earnings and maintain compliance with both US and UK tax laws.
Remember, this guide provides general information, and your specific circumstances might require additional considerations. When in doubt, consulting with a tax professional familiar with international publishing income can provide peace of mind and ensure you’re making the most of available tax benefits.
Reminder: If you are publishing via us at UK Book Publishing – you don’t need to do any of this. We take care of it all.