Hobby or business?
Tax is due on trading profits, not on clearing out your wardrobe. HMRC looks at the whole picture — the so-called 'badges of trade' — including:
- Do you make or buy items to sell for a profit?
- Is it regular and organised — listings, branding, stock, repeat sales?
- Do you modify or improve items before selling them?
- Are you selling things you bought intending to resell?
Most Etsy shops selling handmade or custom products are trading. Someone occasionally selling their own used clothes on Vinted usually isn't.
Selling personal possessions
Selling your own belongings isn't income tax trading. Separate Capital Gains Tax rules can apply to valuable items sold for a gain, but most second-hand sales are below the levels where that matters.The £1,000 trading allowance
Individuals get a £1,000 trading allowance each tax year. If your total gross trading income — sales before any costs, across all your side hustles — is £1,000 or less, you may not need to tell HMRC at all.
Above £1,000, you can either deduct the £1,000 allowance or deduct your actual expenses, but not both. GOV.UK confirms you can't deduct other expenses if you claim the allowance. See the full trading allowance guide.
Useful tool
Enter sales and costs to see if the £1,000 allowance or your expenses gives the lower tax.
Platforms report to HMRC
Under the digital platform reporting rules, marketplaces like Etsy, eBay and Vinted collect and report details of sellers to HMRC. GOV.UK explains that platforms don't need to report sellers getting a total of €2,000 or less (about £1,700) for fewer than 30 sales of goods in a year.
These rules are about reporting, not a new tax. Being reported doesn't automatically mean you owe tax — and not being reported doesn't mean you don't. What matters is whether you're trading and how much you make.
Expenses you can claim
- Materials and stock — what your products are made from, or the cost of items you resell.
- Platform fees — Etsy listing, transaction and payment processing fees, eBay or Vinted seller fees.
- Postage and packaging.
- Equipment — sewing machines, printers, craft tools, photography gear.
- Advertising — Etsy Ads, social media promotion.
- Working from home — a share of costs, or HMRC's flat rates for home working.
If your costs add up to more than £1,000, claiming them gives a lower taxable profit than the trading allowance. The Etsy seller calculator does the comparison for you.
If you need to file
- Register as self-employed by 5 October after the end of the tax year your sales went over £1,000.
- Download your sales and fee reports from each platform for the tax year (6 April to 5 April).
- Total your costs, or decide to use the trading allowance instead.
- Report your income and expenses on the self-employment pages, file by 31 January and pay what you owe.
With TaxGo, upload your platform reports and receipts — TaxGo reads the figures, picks the better of expenses or the allowance, and prepares your return ready to check and submit for £79.
Other things to know
- Employed too? Your side-hustle profit is added to your salary in your return, so it may be taxed at a higher rate.
- VAT only applies once taxable turnover goes over £90,000.
- Selling abroad doesn't change your UK income tax, but check VAT and customs rules for overseas buyers.