Answers · UK 2025/26

Do I need to pay tax on Etsy sales in the UK, and what is the threshold?

Etsy selling income is taxable as trading income once your gross income from all self-employment and side-hustle sources exceeds £1,000 in a tax year (the trading allowance). Above that, you must register for Self Assessment, pay Income Tax and Class 4 National Insurance on profits, and register for VAT once turnover passes £90,000.

Last updated: 4 July 2026Last reviewed: 4 July 2026How we verify

Full answer

Selling handmade or vintage items, craft supplies, or digital downloads on Etsy counts as trading income for tax purposes if done with a view to profit and any regularity — which covers the vast majority of active Etsy shops, as opposed to a genuine one-off clear-out of personal possessions. The £1,000 trading allowance covers gross trading income (before Etsy fees and postage costs are deducted) across all your self-employment and side-hustle activities combined, not £1,000 per platform. Once your total gross trading income for the tax year exceeds £1,000, you must register for Self Assessment and declare profit, deducting either the £1,000 allowance or your actual allowable expenses (materials, Etsy listing and transaction fees, packaging, postage, a proportion of home costs for a home studio), whichever gives the better result. Profit is taxed at 0% up to the £12,570 Personal Allowance, 20% up to £50,270, 40% above that, plus Class 4 National Insurance at 6% between £12,570 and £50,270 and 2% above. Since 2024, UK online marketplaces including Etsy have been required to report seller sales data directly to HMRC under new digital platform reporting rules, meaning HMRC increasingly cross-checks Etsy sellers' declared income against platform-reported figures — undeclared income is much easier for HMRC to spot than in the past. VAT registration is compulsory once rolling 12-month turnover passes £90,000. Use the Self-Employed Tax calculator to estimate your own liability.