Do I pay tax on Etsy sales?
Etsy is different from the big general resale platforms in one important way: almost nobody opens an Etsy shop to clear out a wardrobe. Sellers are overwhelmingly makers — people producing jewellery, prints, candles, knitwear, woodwork — or people curating and modifying vintage finds to sell on. That single fact changes the tax question quite a lot compared with a platform like Vinted or Depop, where most sellers are simply moving on things they already owned.
"Made or modified" is the badge that matters
HMRC's test for whether you're trading isn't about the platform, it's about what you did with the item before selling it. Selling your own unwanted possessions — things you bought for yourself and no longer want — is not trading and is normally not taxable. But if you made the item, or substantially modified something to sell it on (restyled vintage clothing, upcycled furniture, hand-finished jewellery from raw materials), that's a different situation: you created something with a view to selling it, and that's a core marker of trading, however small the operation.
This doesn't mean every Etsy seller owes tax. The £1,000 trading allowance covers a genuine amount of small-scale making — many hobbyist shops selling a modest, occasional amount stay under it entirely, with nothing to pay and nothing to file for that income. It's only once gross trading income passes £1,000 in a tax year that Self Assessment comes into the picture.
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Which tax year is this for?
Most people checking now need the year that ended 5 April 2026.
See a sample report before you buy.
When an Etsy shop needs to register with HMRC
Once gross trading income for the tax year is over £1,000, the trading allowance still applies — it's deducted from what you earned rather than disappearing — but you now need to register for Self Assessment. Registration is due by 5 October after the end of the tax year you started trading in, and the return itself, filed and paid online, is due by 31 January the following year. Etsy shop owners often underestimate how quickly a successful small shop crosses £1,000 in a year, especially once materials, supplies and packaging costs are on top of what you're already spending to make each item.
Since the 2024 calendar year, Etsy and other digital platforms have had to collect and, above a threshold, report seller details to HMRC — roughly 30 sales or about £1,700 in a year. For an active Etsy shop that's a low bar to clear, so it's sensible to assume your sales may be visible to HMRC and to keep your own records — orders, materials costs, postage — in good shape from early on rather than trying to reconstruct a year of transactions later.
If you're not sure whether your shop counts as trading, or whether you're already over the allowance, the checker above takes your actual figures and ownership answers and gives a specific verdict in about two minutes.
A high-value one-off commission
Most of this page is about ongoing shop income from repeat listings, but Etsy sellers occasionally take on a single large commission — a bespoke piece of furniture, a large batch order, a significant custom design — that's worth considerably more money than a typical listing. If a commission or sale like that is genuinely part of your trade (you made it to sell it), it's trading income like everything else in your shop and is assessed the same way, rather than under the separate personal-possessions Capital Gains Tax rule, which is aimed at selling things you already owned for your own use, not things you made to order. Keep a note of materials, time and the agreed price for anything unusually large, so the figure is easy to trace back through your accounts if you ever need to.
Frequently asked questions
Isn't selling my own handmade things just a hobby, not a business?
It can be, and HMRC does recognise genuine hobbies. But the fact that an item was made or modified by you is itself one of the clearest signals HMRC uses to identify trading — unlike a clear-out seller disposing of things they already owned, a maker has created something specifically with a view to selling it, which points towards trading rather than personal disposal.
Does Etsy report my sales to HMRC?
Etsy is a digital platform under HMRC's reporting rules, which have applied since the 2024 calendar year. Above roughly 30 sales or about £1,700 (€2,000) in a year, Etsy may report your seller details to HMRC. That's a reporting threshold, separate from whether your income is actually taxable.
What's the £1,000 trading allowance and does it cover me?
The trading allowance lets you earn up to £1,000 of gross trading income in a tax year with no tax to pay and, if that's your only trading income, no need to file a Self Assessment return for it. Many small or occasional Etsy shops fall entirely within this allowance.
I also sell vintage or bought-in items alongside things I make — does that change anything?
It doesn't change the underlying test, but it strengthens the trading case. Items bought specifically to resell, alongside items you've made, both point the same way — towards running a shop rather than disposing of personal items — so the checker below treats 'made or modified' and 'acquired to resell' as separate signals that can each apply.
What do I need to register and file if I am trading?
If your gross trading income is over the £1,000 trading allowance for the tax year, you need to register for Self Assessment by 5 October after that tax year ends, then file and pay online by the following 31 January.
This is guidance, not tax advice.