Etsy Seller Tax Calculator UK

Yes — Etsy shop income is trading income subject to income tax and National Insurance. If your Etsy sales exceed £1,000 per year (Trading Allowance), you must register for Self Assessment and declare income to HMRC.

Etsy charges UK sellers: £0.16 listing fee per item (renewed every 4 months or when sold), 6.5% transaction fee on sale price + shipping, and payment processing fees (4% + 20p for Etsy Payments). Total fees typically amount to 10–15% of revenue.

Yes — the cost of materials, supplies, and components used to create items you sell are deductible business expenses. Keep receipts for all materials. The cost of goods method (purchase price of materials) is most commonly used.

Yes — under DAC7 rules (from January 2024), Etsy reports seller income to HMRC. If you sell regularly and earn over approximately £1,700/year, Etsy shares your data with HMRC. This means HMRC may already know about your Etsy income.

You must register for VAT when annual taxable turnover exceeds £90,000. Note: if you sell to EU customers, you may need to register for EU VAT (via OSS scheme) even below the UK threshold for digital goods/services.

Yes — if you use part of your home exclusively for Etsy work (crafting, photography, storage), you can deduct a proportion of household costs (rent, utilities, broadband). Calculate based on floor space used or rooms dedicated to business.

Craft tools, sewing machines, photography equipment, computers, cameras, software, and machinery used for production are all deductible. Capital items (over ~£100 and used for multiple years) may qualify for the Annual Investment Allowance.

Most Etsy sellers earn below the threshold where limited company benefits outweigh costs. Consider it when annual profits exceed £35,000–£40,000. Below that, the accounting costs (£1,000–£2,000/year) typically exceed any tax saving.

Yes — income from teaching craft workshops, online courses, or in-person classes is trading income. It's taxed the same as product sales. If workshops are your primary activity, you may be classified as a business separately from your product shop.

Etsy Pattern (standalone website) income is treated identically to Etsy shop income for tax purposes — it's all trading income. Total your Etsy shop + Pattern + any other related income on your Self Assessment.

Etsy Ads spend is a fully deductible business expense. Download your Etsy Ads report to get exact spend figures. Include this in your expenses calculation — high ad spend can significantly reduce your taxable profit.

HMRC distinguishes hobbies (personal enjoyment, irregular, not profit-motivated) from trading (systematic, profit-motivated). Most Etsy sellers with regular customers and profit intent are trading. The Trading Allowance covers low-income hobby sellers up to £1,000/year.