Are you in? It’s your takings, not your profit
Add up the full price buyers paid you in the 2025/26 tax year across every platform and your own website – including any postage you charged them – before platform fees, stock or shipping costs come off. Clearing out your own wardrobe or loft doesn’t count. If your trading sales (plus any rent from property) come to more than £30,000, MTD applies from 6 April 2027; over £50,000 and you’ve been in since April 2026.
Over £50,000
Over £30,000
Over £20,000
planned
Your work in accountant language
What actually happens in your working life, what your accountant and HMRC call it, and what to do about it.
| What happens | Accountant calls it | What you do |
|---|---|---|
| A buyer pays £40 for an item plus £3.50 postage on eBay | Sales / turnover (gross, including postage charged) | Record £43.50 as income – not the smaller amount that lands in your bank. |
| The platform keeps its final value fee, listing fee and payment processing fee | Allowable expense – selling fees | Download the platform’s monthly statement and record fees as a separate expense. |
| You buy a job lot at a car boot or wholesale stock to sell on | Cost of goods – stock purchases | Record what you paid when you pay it (cash basis). Keep the receipt or a note of cash purchases. |
| You buy postage labels, bubble wrap and boxes | Allowable expense – postage and packaging | Most label services give a downloadable history – import it monthly. |
| A buyer returns an item and you refund them | Refund – reduces turnover | Record the refund against sales, not as a normal expense. |
| You sell your old sofa or clothes you’ve worn | Not trading – personal disposal | Keep it out of your business records (ideally sell it from a separate account). |
| You transfer money from your PayPal or bank to cover your rent | Drawings – not an expense | Fine to do, but it doesn’t reduce your tax. |
| Every three months | Quarterly update | Your software sends HMRC your sales, fees and costs totals. |
| After 5 April | Final declaration | Confirm the year’s figures; tax is worked out and due by 31 January. |
What can a online seller claim?
✓ Usually allowable
- Stock you buy to resell, and materials for things you make
- Platform fees: eBay final value fees, Etsy listing and transaction fees, Amazon referral and FBA fees, TikTok Shop commission
- Payment processing fees (PayPal, Stripe, Shopify Payments)
- Postage, courier labels and packaging
- Promoted listings, Etsy Ads and other online advertising
- Shop subscriptions (eBay shop, Shopify, Amazon Pro seller plan)
- Photography kit, lightbox and label printer
- Storage unit rent or a share of home costs if you work from home
- Business mileage to collect stock or drop parcels (45p a mile for the first 10,000)
✗ Not allowable
- Things you bought for yourself and later sold
- Stock you take out of the business for personal use (record it as drawings)
- Parking fines while collecting stock
- Your own clothes and personal phone use
- Money you take out for yourself (drawings)
Rules that matter for online sellers
Trading or decluttering?
Selling your own unwanted belongings is not trading and isn’t taxed as income. Buying things in order to sell them at a profit, making items to sell, or selling regularly in a business-like way usually is. HMRC looks at things like how often you sell, whether you bought items with resale in mind, and whether you repair or improve them first.
Platforms report sellers to HMRC
Since 1 January 2024, digital platforms such as eBay, Etsy, Vinted and Amazon share sellers’ details and sales figures with HMRC. Sellers with fewer than 30 sales and under about £1,700 a year aren’t reported. Being reported doesn’t mean you owe tax – but HMRC can compare their figures with your return, so keep records that explain the difference.
Stock bought vs stock sold
Under the cash basis, most sole traders deduct stock when they pay for it, not when it sells. A big stock buy in March can mean a low profit that year and a higher one the next. If you use the accruals basis instead, unsold stock at the year end is valued and carried forward.
VAT and selling overseas
If your sales go over £90,000 in any rolling 12 months you must register for VAT – that’s a separate test from MTD for Income Tax. Selling to buyers abroad can bring other VAT rules, so check gov.uk if you ship overseas.
Worked example
Priya runs a vintage clothing shop on Vinted, eBay and Depop from Bristol (illustrative example)
| Takings (turnover) | £38,500 |
| less Stock bought (charity shops, car boots, wholesale bundles) | −£12,400 |
| less Platform and payment fees | −£4,900 |
| less Postage and packaging | −£4,200 |
| less Promoted listings and ads | −£1,100 |
| less Storage unit and garment rails | −£1,600 |
| less Mileage collecting stock (1,400 miles) | −£630 |
| Profit | £13,670 |
| Income tax (estimate) | £220 |
| Class 4 National Insurance (estimate) | £66 |
| Total tax for the year | £286 |
| Put aside each month | £24 |
Estimate for 2026/27 using England, Wales & NI rates, assuming no other income. Scotland has different income tax bands.
What a quarterly update looks like
A typical quarter for an online seller: download the sales and fees reports from each platform, import your postage label history, add stock receipts (and a note of any cash buys at car boots), and check refunds have gone against sales – then submit. Connecting the platforms to your software, where it supports them, saves most of the typing.
| Quarter | Period | Submit by |
|---|---|---|
| Q1 | 6 Apr – 5 Jul | 7 Aug |
| Q2 | 6 Jul – 5 Oct | 7 Nov |
| Q3 | 6 Oct – 5 Jan | 7 Feb |
| Q4 | 6 Jan – 5 Apr | 7 May |
| Final declaration | The whole tax year | 31 Jan following |
Quarterly updates are summaries – they don’t change when you pay. Tax is still due by 31 January (plus payments on account on 31 January and 31 July if they apply to you).
What will an accountant cost?
Typical monthly fees under MTD for Income Tax for: Online sellers and traders.
| Option | What you get | Per month |
|---|---|---|
| You do it yourself | MTD-compatible software. You keep the records and send the updates. | £0–£20up to £240 a year |
| Accountant files for you | You keep records in an app; they check them, send the 4 quarterly updates and the final declaration. | £40–£75about £480–£900 a year |
| Full service | They do the bookkeeping too – you share receipts and bank feeds, they handle the rest. | £80–£150about £960–£1,800 a year |
What pushes the price up: stock, several selling platforms and hundreds of small sales; records kept on paper rather than in an app; being VAT-registered; catching up on missed updates or late returns.
What a fixed-fee quote should include
- All 4 quarterly updates and the final declaration (your tax return)
- The MTD software licence – or whether you pay for it separately
- Whether they do the bookkeeping or only check what you’ve recorded
- A reminder before each deadline and an estimate of the tax to put aside
- Whether VAT (20%) is added on top – not every practice charges it
Accountancy fees for your business are an allowable expense, so they reduce your tax bill.
Indicative ranges from published UK price lists, checked October 2026. Not a quote – your fee depends on how many transactions you have, how tidy your records are and where you live.
Questions online sellers ask
Vinted sent my details to HMRC. Do I owe tax?
Not necessarily. If you were only selling your own used clothes for less than you paid, that isn’t trading income. If you were buying to resell, it is – and you should declare the profit.
Do I count the postage the buyer paid?
Yes. Postage charged to buyers is part of your sales, and the postage you pay out is an expense. That’s why turnover is often higher than sellers expect.
I sell on four platforms. Do I need four sets of records?
No. It’s one business. Your software should pull everything into one set of income and expense totals for the quarterly update.
Amazon pays me after deducting FBA fees. What’s my income?
The full price customers paid. Record Amazon’s referral, fulfilment and storage fees as expenses.
Sources
- Find out if and when you need to use Making Tax Digital for Income Tax – GOV.UK
- Work out your qualifying income for Making Tax Digital for Income Tax – GOV.UK
- Send quarterly updates using Making Tax Digital for Income Tax – GOV.UK
- Find software that works with Making Tax Digital for Income Tax – GOV.UK
- Penalties for Making Tax Digital for Income Tax – GOV.UK
This guide is general information about HMRC’s Making Tax Digital rules as of 26 October 2026, not tax advice. MTD Match is an independent introduction service and is not affiliated with HMRC. Check gov.uk or speak to an accountant about your own situation.