Trading vs Personal Selling
HMRC uses the "badges of trade" to decide whether you are trading. Indicators include buying to resell, making items to sell, repeated similar transactions, and marketing yourself as a seller. Selling your own genuinely used clothes on Vinted is generally not trading; reselling thrifted items for profit is.
Gross Sales — The Threshold Test
MTD looks at gross sales receipts — the amount the buyer paid before platform fees, postage and PayPal charges. Etsy and eBay payout reports show this clearly. Multi-platform sellers add all marketplace gross figures together.
- Over £50,000 gross sales — from April 2026
- £30,000–£50,000 — from April 2027
- £20,000–£30,000 — from April 2028
What You Need to Record Digitally
- Gross sales per platform (Etsy, eBay, Vinted, Depop, Amazon, Shopify, direct).
- Postage charged to the buyer (income) and postage paid (expense).
- Marketplace fees, listing fees, payment processing (Stripe, PayPal).
- Cost of goods sold — stock purchases, raw materials.
- Packaging, labels, printer ink, photography props.
- Home-as-office (use HMRC simplified flat rate or actual costs).
- Software, subscriptions, advertising.
Digital Platform Reporting (DAC7 / OECD Rules)
Since 1 January 2024, UK marketplaces must report seller earnings to HMRC every January for the previous calendar year. If your platform earnings exceed €2,000 (around £1,700) or 30 transactions in a year, expect HMRC to receive your data automatically. Under- declaring is therefore far more likely to be picked up than before.
The £1,000 trading allowance
If you are trading but your gross sales for the year are under £1,000, the trading allowance usually means you do not need to report the income at all. Above £1,000 you can choose to deduct the flat £1,000 allowance instead of your actual costs, which can suit sellers with very low expenses. Serious sellers heading for the MTD thresholds will normally be better off claiming real costs — but the allowance is a useful line between a hobby and a reportable trade.
Quarterly Updates for Online Sellers
Sellers in scope submit four quarterly updates summarising sales and expenses — due 7 August, 7 November, 7 February and 7 May — then a final declaration by 31 January after the tax year. Most ecommerce-friendly MTD software can import payouts directly from Etsy, eBay, Shopify and Amazon, so you do not have to type transactions in by hand.
Best MTD Software for Marketplace Sellers
Look for marketplace integrations and stock-aware reporting. Xero, QuickBooks, FreeAgent and A2X (with QuickBooks or Xero) are widely used by Etsy and Amazon sellers. Spreadsheet sellers can use MTD bridging software to file from Excel.