Etsy seller tax UK: what to declare for 2025/26

Updated 21 October 2026 · For the 2025/26 tax year (return due 31 January 2027)

Selling on Etsy is one of the most popular UK side hustles – and one of the most common sources of January confusion. Here's what UK Etsy sellers need to know about tax for the 2025/26 tax year (6 April 2025 to 5 April 2026), with the return due by 31 January 2027.

Is my Etsy shop a business?

If you make things to sell (jewellery, candles, prints, digital downloads) or buy stock to resell, HMRC will normally see that as trading. Selling the odd personal item you no longer want generally isn't – but on Etsy, almost everything listed is handmade, vintage stock or supplies, so most Etsy shops are trading.

The £1,000 test

If your gross income from all your trading activities in the tax year was £1,000 or less, the trading allowance usually covers it: no tax, and no need to tell HMRC (unless you want to, for example to claim a loss). Over £1,000 gross and you must register for Self Assessment and file a return, even if your profit is small.

Remember it's all trades combined. £700 on Etsy plus £500 of freelance work is £1,200 – over the limit.

Etsy now reports to HMRC

Since 1 January 2024, digital platforms like Etsy must collect sellers' details (such as name, address, date of birth and National Insurance number or UTR) and report sales to HMRC. Sellers with fewer than 30 sales of goods and 2,000 euros (about £1,700) or less in a year are excluded from reporting. The first reports covered 2024 and went to HMRC by 31 January 2025, so HMRC will increasingly be matching platform data with tax returns. Note that platform reports run on calendar years, while your tax return runs 6 April to 5 April – so don't just copy Etsy's annual figure.

Working out your Etsy turnover

Your turnover is what buyers paid you before Etsy took its cut. Use your Etsy Payments monthly statements or the sold orders CSV for 6 April 2025 to 5 April 2026 and include:

item sales
postage you charged buyers
any other income such as custom commissions paid outside Etsy

Don't include VAT Etsy collected on your behalf for overseas buyers under marketplace rules. If you also sell on eBay, Vinted, Folksy or at craft fairs, add those too – it's one business if it's the same activity.

Expenses Etsy sellers can usually claim

Expense	SA103S box (if itemising)
Materials, supplies, stock bought for resale	Box 11 – cost of goods
Postage and delivery to customers, mileage to the post office	Box 12 (travel) or box 18 for postage
Etsy listing, transaction and payment processing fees	Box 17 (financial charges) or box 19 (other)
Etsy Ads, Offsite Ads, Instagram promotion	Box 19 – other allowable expenses
Packaging, labels, printer ink, business share of phone and broadband	Box 18 – phone, stationery and office costs
Equipment like a Cricut, camera or kiln	Usually box 11–19 under cash basis, or capital allowances

If your turnover was under £90,000 you can simply enter total expenses in box 20 rather than itemising. You can also use HMRC's flat rate for working from home (from £10 a month for 25–50 hours) and 45p a mile for business car journeys. Personal spending isn't allowable – only the business share.

Allowance or expenses?

You can deduct either the £1,000 trading allowance or your actual expenses, not both. A shop with £3,000 sales and £600 of costs is better off with the allowance (taxable profit £2,000 instead of £2,400). A shop with £3,000 sales and £1,500 of costs should claim expenses. Our trading allowance vs expenses guide has more examples.

How much tax will I pay?

Your Etsy profit is added to any wages. Above your £12,570 Personal Allowance it's taxed at 20% in England, Wales and Northern Ireland up to £50,270, and 40% above. Class 4 National Insurance of 6% only starts when your self-employed profit itself goes over £12,570. If your profit is under £6,845 you can choose to pay voluntary Class 2 NI (£3.50 a week for 2025/26) to protect your State Pension record.

Etsy tax checklist for January

Download Etsy monthly statements for April 2025 to April 2026.
Total gross sales and postage income for 6 April 2025 – 5 April 2026.
Total Etsy fees, ads and your other costs, with receipts.
Compare the trading allowance with actual expenses.
Register for Self Assessment if you haven't already, then file and pay by 31 January 2027.

Get your 2025/26 numbers sorted

January Sorted is a £17 spreadsheet tracker for UK side hustles: it compares the trading allowance with your expenses, estimates your tax, NI and payments on account, and lays out your SA103S figures box by box. Excel & Google Sheets.

Launch offer: 20% off with code JANUARY20 until 31 December.

Buy January Sorted – £17 See inside →

Frequently asked questions

Do I have to pay tax on Etsy sales in the UK?

If you're trading – making or buying items to sell – your Etsy profit is taxable. If your gross trading income across all your trades is £1,000 or less in the tax year, the trading allowance usually means no tax and no need to tell HMRC.

Does Etsy report my sales to HMRC?

Etsy is a digital platform covered by the reporting rules that started on 1 January 2024, so it collects seller details and reports qualifying sellers' sales to HMRC.

Do I declare Etsy income before or after fees?

Before. Your turnover is your gross sales including postage charged to buyers. Etsy listing, transaction, payment processing and advertising fees are then claimed as expenses.

Can I deduct the cost of materials?

Yes. Materials, packaging, postage, Etsy fees, Etsy Ads and a share of phone and internet used for the business are usually allowable expenses – unless you choose the £1,000 trading allowance instead.

Sources (GOV.UK, checked 21 October 2026)

General information, not tax advice. Rules can change – always check GOV.UK or speak to an accountant. January Sorted is not affiliated with HMRC.