Selling on Etsy, eBay or Vinted: The UK Tax Rules You Need to Know

Selling on Etsy, eBay or Vinted is taxable in the UK when it amounts to trading, and you must tell HMRC about the income once your gross trading income passes £1,000 in a tax year. Side hustle tax UK rules catch many casual sellers out because the platforms now send seller data to HMRC, so your sales are visible whether or not you declare them. Blue Tick Accountants, a Guildford-based UK tax advisory and accountancy practice, helps online sellers work out whether they are trading, what they can deduct and how to register. This article explains the difference between clearing out your wardrobe and running a business, how the £1,000 trading allowance works, the 2026/27 deadlines, and how Making Tax Digital may affect a growing shop. It includes a worked example with real figures. If you are unsure where you sit, our article on when a side hustle becomes a business in HMRC's eyes is the best companion read.

Key Takeaways

• Selling your own unwanted personal possessions is generally not taxable, but buying goods to resell or making items to sell counts as trading and is taxed as self-employment income.
• Gross trading income of £1,000 or less in a tax year is covered by the £1,000 trading allowance, and you must file a self assessment return once sole trader income exceeds £1,000 before expenses.
• You can deduct either your actual allowable expenses or the £1,000 trading allowance from your income, never both.
• Class 4 National Insurance is 6% on profits between £12,570 and £50,270 in 2026/27, so a small side business often pays no National Insurance at all.
• For 2026/27 you must register for self assessment by 5 October 2027, and file online and pay by 31 January 2028.
• Making Tax Digital for Income Tax applies to qualifying income over £50,000 from 6 April 2026, over £30,000 from 6 April 2027 and over £20,000 from 6 April 2028.

What is side hustle tax in the UK for 2026/27?

Side hustle tax is not a separate tax: it is income tax, and sometimes National Insurance, charged on the profit you make from trading on the side. Your profit is added to your other income, so if you earn a salary in the 20% basic rate band, your Etsy or eBay profit is taxed at 20% after your £12,570 personal allowance has been used. Higher earners pay 40% above £50,270. Class 4 National Insurance applies at 6% only on profits between £12,570 and £50,270, and 2% above that. Tax is charged on profit, meaning sales less allowable costs, not on turnover, which is why keeping records of fees, postage and materials matters.

When does selling on Etsy, eBay or Vinted count as trading?

Selling counts as trading when you buy or make goods with the aim of selling them for profit, on a regular and organised basis. HMRC looks at the badges of trade: whether you bought items to resell, how often you sell, whether you make or improve the goods, and whether you run the activity in a business-like way. Selling your own used clothes, furniture or toys for less than you paid is not trading, and personal items sold for £6,000 or less are generally exempt from capital gains tax. Platforms including Etsy, eBay and Vinted now report seller details to HMRC under digital platform reporting rules, with HMRC pointing to sellers making 30 or more sales or earning around €2,000 a year. Our guide to self-employed expenses lists what you can deduct once you are trading.

How does the £1,000 trading allowance work for online sellers?

The trading allowance gives you £1,000 of tax-free trading income each tax year, and you choose between using it or deducting your actual expenses. If your gross income from selling is £1,000 or less, it is covered by the allowance and you do not need to report it. If it is above £1,000, you either deduct the £1,000 allowance from your income, or deduct your real costs, whichever gives the lower profit.

Take an Etsy seller who has a £35,000 salary and sells £8,400 of handmade goods in 2026/27. Platform fees are £780, postage £1,150 and materials £1,970, so actual expenses are £3,900 and taxable profit is £4,500. At 20% the tax is £900, with no Class 4 National Insurance because profit is below £12,570. Using the allowance instead gives a profit of £7,400 and tax of £1,480, so claiming actual expenses saves £580.

Now take a Vinted reseller with £1,800 of sales and £400 of costs. Actual profit is £1,400, taxed at £280. The allowance gives a profit of £800 and tax of £160, so the allowance is better.

How do you register, file and pay tax on online sales in 2026/27?

You must register for self assessment by 5 October following the end of the tax year in which you started trading, which means 5 October 2027 for 2026/27. The online return and any tax are then due by 31 January 2028. Keep sales records, platform statements and receipts for at least five years after the 31 January filing deadline. If your total qualifying income from self-employment and property, measured before expenses, was over £50,000 in 2024/25, Making Tax Digital for Income Tax already applies to you in 2026/27, with digital records, quarterly updates and a final declaration. Our guide to Making Tax Digital for the self-employed explains the thresholds that follow in April 2027 and April 2028.

Frequently Asked Questions

Do I pay tax on selling clothes on Vinted?

Not if you are clearing out your own used clothes, because selling personal possessions for less than you paid is not taxable. You pay tax if you buy clothes to resell or sell regularly as a business, in which case the profit is trading income and the £1,000 trading allowance may apply.

How much can I earn on Etsy or eBay before paying tax?

You can receive up to £1,000 of gross trading income in a tax year without reporting it, thanks to the trading allowance. Above £1,000 you must register and file a return, but you only pay tax on profit after allowable expenses and your personal allowance of £12,570.

Does HMRC know about my eBay or Vinted sales?

Yes, it can. Under digital platform reporting rules, platforms such as eBay, Etsy and Vinted send seller information to HMRC, including income received, for sellers who pass certain activity thresholds. Declaring accurately through self assessment is the safest approach if you are trading.

Do I need to register as self-employed for a side hustle?

You need to register for self assessment if your trading income is over £1,000 before expenses in a tax year. For 2026/27, register by 5 October 2027. Registering for self assessment does not mean paying Class 2 National Insurance, which is voluntary for low profits.

How Blue Tick Can Help

Blue Tick Accountants helps Etsy, eBay and Vinted sellers decide whether they are trading, choose between the trading allowance and actual expenses, and file accurately. Blue Tick also sets up Making Tax Digital records for growing shops so deadlines are never missed. Head to our website and book a meeting now.

Conclusion

Online selling becomes taxable when it turns into trading, and the £1,000 trading allowance sets the point at which you must tell HMRC. Choose the better of the allowance or actual expenses each year, register by 5 October 2027 for 2026/27, and keep clean records of every sale and cost. Platforms already report to HMRC, so accurate declarations protect you from penalties. Plan ahead for Making Tax Digital if sales are growing towards £30,000 or £20,000 of gross income.

About the Author

This guide was written by Leon, founder of Blue Tick Accountants, who advises the self-employed, landlords and limited company owners across the UK on tax planning and compliance. It was last reviewed for the 2026/27 tax year, using current HMRC guidance.

This article is intended for general informational purposes only and does not constitute tax, legal, or financial advice. Tax rules are subject to change and their application will depend on your individual circumstances. You should always seek advice from a qualified professional before taking action. Blue Tick Accountants accepts no liability for decisions made on the basis of this content.

Related reading: Side Income and Your PAYE Code: How HMRC Adjusts Your Employer Tax.

Related reading: Side Hustle Tax UK: Reporting Side Hustle Income on Your Self-Assessment Return.