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Tax for online sellers has not changed, but what HMRC can see has. Since 1 January 2024, UK digital platforms such as eBay, Vinted, Etsy, Amazon and Airbnb have had to collect details about their sellers and report their earnings to HMRC every January. If you sell regularly online, run a dropshipping store or earn from YouTube, HMRC can now match what you earn against what you declare.
Selling on Amazon, eBay or Etsy? Our accountants for online sellers match your platform reports, claim your stock and fees, and file your return for a fixed fee.
This guide explains what HMRC receives, when selling online becomes taxable, how the £1,000 trading allowance works, and the specific rules for dropshippers, YouTubers and content creators in 2026/27.
What HMRC can see now: the digital platform reporting rules
The reporting rules, known as the OECD Model Reporting Rules, came into force on 1 January 2024. Platforms sent their first reports to HMRC in January 2025, covering the 2024 calendar year, and now report every year.
For each seller in scope, platforms report:
- Your name, address and date of birth
- Your National Insurance number or tax reference
- How much you earned and how many sales you made in each quarter
- The fees and commission the platform took
- Your bank account details
- For property lets, the address of each property
Platforms do not report you if you made fewer than 30 sales of goods and earned €2,000 (about £1,700) or less in the year. This exemption only covers selling goods, so people offering services or letting property can be reported whatever they earn. This is a reporting limit only. HMRC is clear that it does not change how much tax anyone should pay, so you can be under the reporting limit and still owe tax, or over it and owe nothing.
HMRC also receives the same kind of data from platforms in other countries, and it uses this data to send letters to people whose declared income does not match. You can read the official guidance on reporting rules for digital platforms on GOV.UK.
When does selling online become taxable?
Selling your own unwanted things, such as old clothes on Vinted or a bike on eBay, is not trading. You do not pay Income Tax on it, even if you sell a lot of items. You might only pay Capital Gains Tax if you sell a single item for more than £6,000 at a profit, which is rare for personal belongings.
You are trading, and tax for online sellers applies, when you buy or make things in order to sell them at a profit. HMRC looks at signs known as the badges of trade, including:
- Buying items with the intention of reselling them
- Selling regularly, rather than once or twice
- Making or changing items before you sell them
- Selling things similar to items you have sold before
- Marketing your products or running an online shop
The £1,000 trading allowance
If your total trading income is £1,000 or less in a tax year, it is tax-free and you do not need to tell HMRC. This limit is your total gross income across all your trades and platforms, not £1,000 per platform.
If you earn more than £1,000, you must register for Self Assessment by 5 October after the end of the tax year. You can then either deduct the £1,000 allowance or your actual business expenses, whichever gives you the lower profit.
How much is tax for online sellers in 2026/27?
Tax for online sellers works the same way as for any sole trader. Your profit from online selling is added to any other income and taxed at the normal rates. For 2026/27 in England, Wales and Northern Ireland:
| Profit and other income | Income Tax | Class 4 National Insurance |
|---|---|---|
| Up to £12,570 | 0% | 0% |
| £12,571 to £50,270 | 20% | 6% |
| Over £50,270 | 40% (45% over £125,140) | 2% |
Class 2 National Insurance is now voluntary, but paying it can protect your State Pension record if your profits are low. Try our self-employed tax calculator to estimate your bill.
Tax for dropshippers
The rules on tax for online sellers apply in full to dropshipping, because it is trading. Your taxable profit is your sales minus allowable costs, such as:
- The cost of the goods from your supplier
- Shopify, Amazon or marketplace fees and payment processing charges
- Advertising on Meta, Google or TikTok
- Software, apps, domain and hosting costs
- Returns, refunds and chargebacks
Keep proof of every order and convert foreign currency sales and costs into pounds using a consistent exchange rate.
VAT for dropshippers
You must register for VAT if your VAT-taxable turnover goes over £90,000 in any rolling 12 months. That limit is based on sales, not profit, so a dropshipping store on thin margins can reach it quickly. Where goods worth £135 or less are imported and sold to UK customers through an online marketplace, the marketplace is usually responsible for the VAT. Read our guides to accounting for dropshipping businesses and VAT for ecommerce businesses for more detail.
Tax for YouTubers and content creators
Creators are online sellers too, and the same tax for online sellers rules apply to their income. Creators often earn from several places at once, and all of it counts. Taxable income includes:
- YouTube AdSense, TikTok and other platform payouts
- Brand deals and sponsorships
- Affiliate commission
- Memberships, Patreon and tips
- Gifted products you receive in return for a post or review, at their market value
Google may withhold US tax from YouTube earnings unless you submit your tax information in AdSense. UK creators can usually claim a lower treaty rate by doing this, so it is worth checking.
You can deduct costs such as cameras, lighting, editing software, props and a share of your phone and broadband. Equipment usually qualifies for the Annual Investment Allowance, so you can deduct the full cost in the year you buy it. Our accountant for YouTubers guide covers this in more depth.
Making Tax Digital for online sellers
Making Tax Digital is the biggest change to tax for online sellers in years. It started in April 2026 for sole traders and landlords with qualifying income over £50,000. The threshold falls to £30,000 in April 2027 and £20,000 in April 2028. It is based on your gross sales, not your profit, so busy online sellers often reach it sooner than they expect. Once you are in, you need digital records and quarterly updates to HMRC.
What to do if you have not declared online income
The new platform data means mistakes with tax for online sellers are now much easier for HMRC to spot. If you have sold online as a business and not told HMRC, it is better to come forward before HMRC contacts you. You can make a voluntary disclosure through HMRC’s Digital Disclosure Service. Penalties are much lower for unprompted disclosures than for ones made after HMRC has opened an enquiry, and in some cases they can be nil.
If you receive a letter from HMRC about your online sales, do not ignore it. Check the figures, gather your records and get advice before you reply.
Record-keeping checklist for online sellers
Good records make tax for online sellers simple and protect you if HMRC asks questions. Keep:
- Monthly sales reports downloaded from every platform you use
- Receipts and invoices for stock and supplies
- Platform fee, payment fee and advertising statements
- A separate bank account for your business
- Records of any personal items you sold, so you can show they were not trading stock
You must keep these records for at least five years after the 31 January filing deadline for the year they relate to.
Frequently asked questions
Do I have to pay tax on things I sell on Vinted or eBay?
Not if you are selling your own unwanted belongings. You only pay tax if you are trading, for example buying items to resell or making products to sell, and your trading income is over £1,000 a year.
What is the 30 sales rule for online sellers?
Platforms do not have to report sellers to HMRC if they made fewer than 30 sales of goods and earned €2,000 (about £1,700) or less in a year. It is a reporting limit, not a tax-free allowance.
Is the £1,000 trading allowance per platform?
No. The £1,000 trading allowance covers your total gross trading income across every platform and side business in the tax year.
Do online sellers need to register for VAT?
You must register for VAT once your VAT-taxable turnover goes over £90,000 in any rolling 12-month period. The limit is based on sales, not profit.
Are gifted products taxable for influencers?
Yes, if you receive them in return for a post, review or other content. Their market value counts as income for tax purposes.
Get help with tax for online sellers
Cangaf works with eBay, Etsy, Amazon and Vinted sellers, dropshippers and content creators across Bolton, Greater Manchester and the rest of the UK. Our ACCA and AAT qualified team handles your Self Assessment tax return, VAT registration and returns and bookkeeping for a fixed fee, so you can focus on selling.
Get a free quote or call 01204 859315 to speak to an accountant who understands online businesses.
