Selling online: hobby or business?
Not everyone who sells on eBay, Vinted or Etsy owes tax. What matters is what you're selling and why. Here's where HMRC draws the line, how the £1,000 trading allowance works, and what to do if you're over it.
Checked against GOV.UK on 12 October 2026 · About a 5-minute read
1. Clearing out your own things isn't trading
Selling your own unwanted belongings, like old clothes, toys or the contents of a loft, isn't trading. You usually don't need to tell HMRC, and those sales don't count towards the £1,000 trading allowance.
2. Buying or making things to sell usually is
HMRC is likely to treat it as trading if you:
- make things to sell, such as crafts, candles, prints or digital products
- buy stock to resell, for example vintage bundles split up and sold one by one
- sell regularly, with the aim of making a profit
HMRC decides using a set of tests called the badges of trade. The main ones are a profit motive, how often you sell, and whether you bought the item in order to sell it. They're weighed together. No single one settles it, so a few sales with a clear profit motive can still count as trading.
3. The £1,000 trading allowance
You get £1,000 a year tax-free from trading. The tax year runs from 6 April to 5 April.
- £1,000 or less: you don't need to tell HMRC.
- Over £1,000: you need to register for Self Assessment by 5 October after the end of the tax year in which you went over.
The £1,000 is your total sales across every platform and side activity, after refunds but before platform fees, stock, postage or any other costs. It's not profit.
It's also one allowance for everything you do on the side. £600 on Etsy plus £500 from another side hustle makes £1,100, which is over the line.
Source: GOV.UK: Tax-free allowances on property and trading income
4. Allowance or expenses: pick one
Once you're over £1,000, you choose between:
- deducting the £1,000 allowance, or
- deducting your actual expenses, such as stock, postage, packaging and platform fees.
You can't do both. If your expenses come to more than £1,000, claiming them usually means less tax.
5. What you pay once you're trading
Your profit is added to any other income, such as a salary, and taxed at your normal Income Tax rate. If your profit is over £12,570, Class 4 National Insurance applies too: 6% up to £50,270 and 2% above that. Both are worked out on your Self Assessment return.
You no longer pay the old flat weekly Class 2 contribution. If your profit is low, it can be worth paying Class 2 voluntarily to protect your State Pension record. Our Self Assessment guide has more on this.
6. What's coming
The government has announced a simpler way to report trading income between £1,000 and £3,000, instead of a full Self Assessment return. It isn't live yet. Until it is, the rules above apply.
7. Keep records either way
Write down what you sold, for how much, and what you paid for it. If HMRC asks questions, your records are what show a sale was a personal item and not stock.
This guide explains published HMRC rules as they stood on 12 October 2026. It isn't personal tax advice. If your situation is unusual, speak to an accountant. Last checked: 12 October 2026.