So, You’re Making Money Online — What Now?
You started selling on Etsy, Amazon, eBay, or maybe even all three.
It began as a side hustle. Or a hobby. Or a way to clear out your garage…
And now the orders are flying in, and you’re thinking:
“Wait — do I have to pay tax on this?”
Short answer: Probably, yes.
Don’t worry — this guide explains exactly what you need to do, when you need to do it, and how not to get in trouble with HMRC.
Let’s keep it simple.
First: Do You Even Count as a Business?
HMRC doesn’t care if you call yourself a hobbyist.
They look at how you sell — not what you say it is.
Here are signs that you’re running a business in HMRC’s eyes:
✅ You buy or make items to resell
✅ You sell regularly
✅ You aim to make a profit
✅ You advertise your products or services
✅ You repeat similar transactions over time
✅ You get reviews or return customers
If most of those are true, you’re trading — and you need to register for tax.
What Tax Do You Have to Pay?
If you’re trading online in the UK, here’s what could apply:
1️⃣ Income Tax (via Self Assessment)
Once your total income from all sources (job + online sales + side gigs) goes above your personal allowance (£12,570 in most cases), you pay income tax.
You’ll need to:
✅ Register for Self Assessment
✅ File a tax return every year
✅ Pay tax on your profit (not total sales)
2️⃣ National Insurance
If your profit goes over certain thresholds, you’ll also pay:
- Class 2 NICs – if profit is over £6,845/year
- Class 4 NICs – if profit is over £12,570/year
Don’t worry — your accountant (or HMRC) calculates this as part of your tax return.
3️⃣ VAT (But Only If You’re Big-Time)
You only need to register for VAT if your total turnover is more than £90,000 per year (as of 2025).
If you’re not close to that, you can relax — for now.
But keep it in mind as you grow.
How Do You Work Out Your Profit?
HMRC taxes your profit, not your total sales.
So you can subtract your business costs before paying tax.
✅ Allowable business expenses include:
- Materials or products you buy to sell
- Packaging and postage
- Platform fees (Etsy, eBay, Amazon seller fees)
- Website or domain costs
- Equipment or software used for the business
- Phone bills or internet (part, if used for business)
- Business mileage or travel costs
- Accountant or bookkeeping fees
You must keep records (invoices, receipts, reports) to back up your claims.
Do You Need to Register With HMRC?
Yes — if you earn over £1,000 in sales in a tax year from self-employment (side hustle, online trading, freelancing, etc.), you must register for Self Assessment.
This is known as the trading allowance — under £1,000? No tax return needed.
Over £1,000? You must register by 5 October after the end of the tax year.
Example:
If you made £1,500 selling on Etsy between April 2024 and April 2025, you must register by 5 October 2025 and file your return by 31 Jan 2026.
Warning: Online Platforms Now Share Your Info with HMRC
As of 2024–2025, platforms like eBay, Amazon, Etsy, Vinted, Airbnb, Uber and others are required to report your earnings directly to HMRC.
So yes — even if you don’t tell them, HMRC already knows.
Don’t risk fines. Be proactive, file honestly, and keep clean records.
What If You Also Have a Job?
That’s fine! You just need to add your online sales income to your Self Assessment return.
You’ll still:
- Get your personal allowance
- Pay tax only on extra profit
- Be able to claim business expenses
Your employer doesn’t need to know — it’s between you and HMRC.
Selling Personal Items Occasionally?
If you’re just selling the odd second-hand coat, phone, or bike from your home — you probably don’t need to register or pay tax.
But:
- If you’re buying items just to resell
- Or making things to sell for a profit
- Or regularly flipping items for income…
Then you’re trading. And the tax rules apply.
Not Sure If You’re Doing It Right?
If you’ve been selling online for a while and never registered, you might feel a bit nervous.
You’re not alone — thousands of UK sellers are only just learning the rules.
The key is to:
✅ Get compliant now
✅ File a return for previous years if needed
✅ Keep good records going forward
✅ Don’t ignore HMRC — they will catch up
Need Help Sorting It Out?
Our partners help UK online sellers like you:
✅ Register for Self Assessment
✅ Track profits + expenses
✅ File tax returns accurately
✅ Avoid overpaying
✅ Stay on HMRC’s good side
Whether you’re just starting out or cleaning up a messy year — we’ve got your back.
