If you sell regularly on Etsy, eBay, Vinted, Amazon Marketplace or any other digital platform, Making Tax Digital likely applies to you. Since January 2024, HMRC receives annual reports of your earnings from every major selling platform. Your qualifying income for MTD is your gross sales revenue. the total amount customers paid you, before platform fees.
This guide covers exactly what counts as trading income, how the £1,000 trading allowance interacts with MTD, how to distinguish trading from casual selling, and what records you need to keep.
Since 1 January 2024, the UK implemented the OECD Digital Platform Reporting rules. Every major platform. Etsy, eBay, Vinted, Amazon Marketplace, Airbnb, Fiverr, Upwork and others. is legally required to report the gross income of UK sellers to HMRC annually.
HMRC receives a report showing your name, address, National Insurance number (where held), and gross sales for the year. This data is matched against your tax records. Under MTD, your quarterly updates add further data points that HMRC can cross-reference against platform reports.
Not all selling on eBay or Vinted is trading income. HMRC distinguishes between:
HMRC uses the badges of trade test to distinguish the two. The more of these that apply, the more likely HMRC is to treat activity as trading:
If you are unsure whether your activity constitutes trading, the default position is to treat it as trading and report it. The consequences of not reporting trading income are significantly worse than reporting income that turns out not to be taxable.
The trading allowance gives every individual £1,000 of tax-free trading income per year. If your gross trading income is below £1,000, you have no tax to pay and no Self Assessment requirement for that income.
However, and this is crucial. the trading allowance does not reduce your qualifying income for the MTD threshold. Even if you claim the allowance and your taxable profit is zero, your gross sales still count towards the threshold.
Platform fees. Etsy transaction fees, eBay final value fees, PayPal or payment processing charges, arebusiness expenses, not deductions from income. Your qualifying income is your gross sales revenue before any fees are deducted.
This second example is the most important lesson for online resellers. Gross sales of £62,000 with only £12,400 profit still triggers mandatory MTD compliance. The threshold is not about profit. it is about gross revenue.
| Platform | What Counts | What Doesn't Count | Notes |
|---|---|---|---|
| Etsy | Gross sales revenue | Etsy fees (expense), refunds | Download annual earnings statement from Etsy |
| eBay | Gross selling price | eBay fees (expense), personal items | Personal item sales may not be trading |
| Vinted | Gross if trading | Personal clothing sales (not trading) | Systematic reselling = trading |
| Amazon | Gross sales revenue | Amazon fees (expense), returns | FBA fees are expenses not deductions |
| Depop | Gross if trading | Occasional personal item sales | Apply badges of trade test |
| Not.on.the.High.St. | Gross sales revenue | Platform commission (expense) | Same treatment as Etsy |
MTD requires digital records. For online sellers, this means:
Most platforms provide downloadable CSV or PDF reports showing gross sales, fees, and refunds. These should be imported into your MTD software quarterly to keep records current.
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| Quarter | Period | Deadline | 2026–27 Soft Landing |
|---|---|---|---|
| Q1 | 6 Apr – 5 Jul 2026 | 7 Aug 2026 | No points if late |
| Q2 | 6 Jul – 5 Oct 2026 | 7 Nov 2026 | No points if late |
| Q3 | 6 Oct 2026 – 5 Jan 2027 | 7 Feb 2027 | No points if late |
| Q4 | 6 Jan – 5 Apr 2027 | 7 May 2027 | No points if late |
| Final Declaration | Full year 2026–27 | 31 Jan 2028 | Not soft-landed |
Probably not, if these are genuinely your own used possessions sold occasionally. Selling personal items is not trading income. However, if you buy clothing specifically to resell, or sell very frequently with a profit motive, HMRC would likely treat this as trading. Vinted must now report seller earnings to HMRC regardless. so if your Vinted income is significant, it is worth getting clarity on whether it counts as trading.
Yes. the MTD threshold is based on gross sales revenue, not profit. £55,000 of gross sales puts you above the £50,000 threshold regardless of your expenses or profit margin. You are subject to MTD from April 2026.
Yes. All self-employment income is combined for the MTD threshold. If your Etsy gross sales are £28,000 and your eBay gross sales are £24,000, your combined qualifying income is £52,000. above the April 2026 threshold. Each platform is a separate income stream within your single self-employment business.
Each quarterly update reports actual income and expenses for that three-month period. There is no requirement to smooth or average. A Christmas-heavy seller with 60% of income in Q3 (October–December) simply reports high Q3 income and lower figures in other quarters. The annual total across all four quarters is what determines your overall tax position.
No. PAYE salary is excluded from qualifying income. Only your gross online selling income (and any other self-employment or rental income) counts. A teacher earning £35,000 PAYE plus £18,000 in Etsy gross sales has qualifying income of only £18,000. below the April 2028 threshold.
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