Making Tax Digital for eBay and Etsy Sellers — What You Need to Know

If you sell on eBay, Etsy, Vinted, Depop, or any online marketplace and your self-employment income exceeds £50,000, Making Tax Digital for Income Tax applies to you from 6 April 2026.

Does MTD apply to casual sellers?

If you're selling personal items occasionally (clearing out your wardrobe, selling old furniture), you're not trading and MTD doesn't apply. But if you're buying stock to resell, running a shop, or treating it as a business, HMRC considers you self-employed.

The test is whether you're trading with a view to profit. If you file Self Assessment as self-employed for your marketplace income, MTD will apply once your income crosses the threshold.

What income counts?

Your gross sales (total revenue before expenses and platform fees) count towards the £50,000 threshold. This catches a lot of online sellers by surprise — even if your profit is modest, high turnover can push you over the threshold.

For example, if you sell £60,000 worth of goods on eBay but your stock costs £40,000 and eBay fees are £8,000, your profit is only £12,000 — but your qualifying income for MTD is the £60,000 gross figure.

What do you need to submit?

Four quarterly updates per year with your cumulative year-to-date turnover and expenses. The expenses include:

• Cost of stock/goods purchased for resale
• Platform fees (eBay, Etsy, PayPal/Stripe fees)
• Postage and packaging
• Storage costs
• Any other allowable business expenses

Do marketplace platforms report to HMRC?

Yes. Since January 2024, platforms like eBay, Etsy, and Vinted are required to report seller income to HMRC. This means HMRC already knows what you're earning — MTD just formalises the reporting from your side.

How to comply for free

Keep a spreadsheet tracking your sales and expenses. Each quarter, upload it to Flonancial and submit your figures to HMRC. Download your sales data from your marketplace's seller dashboard and reconcile it with your records.

The trading allowance

If your total trading income is under £1,000, you don't need to report it at all (this is the trading allowance). If it's between £1,000 and the MTD threshold, you need to file Self Assessment but not MTD quarterly updates.