Tax on eBay, Vinted, Etsy and Facebook Marketplace Sales in 2026/27

Millions of people in the UK sell items online every year -- clearing out wardrobes on Vinted, selling collectibles on eBay, offloading handmade goods on Etsy or shifting furniture on Facebook Marketplace. For most occasional sellers, there is no tax to pay. But for those who sell regularly or with a commercial purpose, HMRC now has far better visibility than it did five years ago.

From 2024, digital platforms must report seller data to HMRC under new international reporting rules. If you sell regularly and earn meaningful amounts, HMRC may already know about it before you file your tax return.

This guide explains when online selling becomes taxable, how the trading allowance works and what HMRC is looking for.

Selling Personal Items: No Tax

The starting point is reassuring for most sellers. If you are selling your own personal possessions -- clothes you have worn, books you have read, electronics you no longer use, furniture you are replacing -- there is no income tax or capital gains tax to pay.

The CGT rules include a general exemption for "chattels" (moveable personal possessions) sold for £6,000 or less per item. Selling a wardrobe's worth of clothes does not trigger CGT even if the total is substantial, because these are personal items sold at a loss relative to original purchase price.

HMRC is not interested in someone clearing out their house and selling 200 items on eBay over a year. The question it asks is: did you have a profit motive? Were these bought as personal use items or with the intention of reselling?

When Selling Becomes Trading

The line between hobby selling and trading is not always obvious, but HMRC uses the "badges of trade" to assess it:

Clear indicators of trading:

• Buying items specifically to resell them at a higher price
• Regular, frequent transactions of the same type of goods
• Selling goods in commercial quantities (100 pairs of trainers, not 5 old books)
• Modification or improvement of goods before sale (upcycling furniture to sell, not just selling your old furniture)
• Taking out finance to fund stock
• Organised, business-like selling activity (professional photos, dedicated business accounts)

Indicators of non-trading (personal selling):

• Selling possessions originally acquired for personal use
• Infrequent disposals
• Making less than the original purchase price on most items
• No profit motive -- just clearing space

A good rule of thumb: if you would describe what you do as a "side hustle" or "business", HMRC will probably agree with you.

The Trading Allowance: £1,000 Tax-Free

The trading allowance is a straightforward exemption: the first £1,000 of gross income from trading (including online selling) per tax year is tax-free, with no reporting required.

The allowance applies to gross income, not profit. So if you sold £950 of handmade candles on Etsy and spent £600 on materials, you do not need to report anything because gross income is below £1,000 -- even though profit is only £350.

Above £1,000 gross income, you must register for Self Assessment. You then have two options for calculating taxable profit:

1. Trading allowance method: Deduct £1,000 from gross income, pay tax on the rest
2. Actual expenses method: Deduct real allowable costs (stock, postage, platform fees, packaging) from gross income, pay tax on the net profit

Choose whichever gives the lower taxable figure. Most low-margin resellers will benefit from the actual expenses method. Creative sellers on Etsy with high material costs relative to sales will also benefit from actual expenses.

Example: Etsy seller with £4,000 gross income

Actual expenses: materials £2,200, Etsy fees £320, postage £280 = total expenses £2,800.

• Trading allowance method: £4,000 - £1,000 = £3,000 taxable
• Actual expenses method: £4,000 - £2,800 = £1,200 taxable

Actual expenses method saves £360 in income tax at 20% in this example.

HMRC's Data From Platforms: The New Reality

The DAC7 rules, implemented in the UK from January 2024, require online platforms to collect and report data to HMRC about sellers who:

• Complete 30 or more transactions in a calendar year, OR
• Earn more than EUR 2,000 (approximately £1,700) in a calendar year

Platforms including eBay, Vinted, Etsy, Amazon Marketplace, Airbnb, Deliveroo, Uber and many others must report this data to HMRC annually. The data includes your name, address, date of birth, National Insurance number (if provided) and total income received through the platform.

HMRC then cross-references this against Self Assessment returns. If the data shows income you have not declared, you will receive a nudge letter asking you to review your tax affairs. Nudge letters are typically the first stage; if you ignore them, HMRC can open a formal investigation.

The practical implication: If you regularly sell on Vinted and earn over approximately £1,700 per year, HMRC has the data. Proactive disclosure and accurate reporting is always cheaper than being caught in an HMRC enquiry where penalties and interest apply.

National Insurance for Online Traders

If your online selling is trading income, NI applies in addition to income tax:

• Class 2 NIC: Flat rate (£3.45/week in 2025/26) if profits exceed £6,725 (Small Profits Threshold). You can choose to pay voluntarily below this to build State Pension entitlement.
• Class 4 NIC: 6% on profits from £12,570 to £50,270, and 2% above £50,270 in 2026/27.

If your side hustle generates £15,000 of profit and you have no other income, you pay 20% income tax on £2,430 (above personal allowance) and 6% Class 4 NIC on £2,430 = £390 + £146 = £536 in total, plus potential Class 2 if applicable.

Registering for Self Assessment

If your gross trading income exceeds £1,000 in a tax year, you must:

1. Register for Self Assessment by 5 October following the end of the tax year
2. File your Self Assessment return by 31 January online (or 31 October for paper)
3. Pay any tax due by 31 January
4. Make payments on account from the second year if your tax bill exceeds £1,000

Registration is done online at gov.uk. You will receive a Unique Taxpayer Reference (UTR) within 10 working days. Failure to register on time may result in a £100 penalty plus interest.

Real Scenario: 50 Items on Vinted for £3,200

Suppose you sold 50 items on Vinted during 2026/27 and received a total of £3,200.

Scenario A: All your own old clothes

• This is personal selling, not trading
• No tax, no reporting required
• Platform data may still be reported to HMRC, but you can demonstrate these were personal items if asked

Scenario B: You bought 30 items from charity shops specifically to resell

• This is trading income
• Gross income: £3,200 -- above the £1,000 trading allowance
• Must register for Self Assessment
• Actual expenses: stock costs £900, Vinted selling fees £160, postage £120 = £1,180
• Taxable profit: £3,200 - £1,180 = £2,020 (better than trading allowance method: £3,200 - £1,000 = £2,200)
• If this is your only income: £2,020 is within personal allowance (£12,570) -- no tax actually due
• But you still must file a Self Assessment return if gross income is above £1,000

Use our trading income tax calculator at calchub.uk to model your specific online selling income with 2026/27 rates and NI figures.