Listing and transaction fees
A fee for each listing, charged again when it renews, plus a transaction fee on the sale price and postage.
Accountants for Etsy sellers
Etsy Accountants for UK Makers
Making Tax Digital for Income Tax has changed what a self-employed maker has to send HMRC, and when. As an Etsy accountant for sole traders, we get you set up for quarterly updates, keep your books, file your tax return and show you what each product really earns after Etsy fees and your time.
Book a discovery call 
Led by an ICAEW chartered accountant- MTD-compatible software included
- Rolling monthly agreement, no minimum term
In short
eCounts is an Etsy accountant for UK makers who sell as sole traders or limited companies. We handle Making Tax Digital for Income Tax quarterly updates, Self Assessment, VAT and bookkeeping, with Xero or QuickBooks included. If you sell a little on Etsy as a hobby, this page also explains when you need to tell HMRC at all.
Platforms we reconcile every month
Trademarks belong to their owners. eCounts is independent and not endorsed by these platforms.
Making Tax Digital for Income Tax
MTD for Income Tax: what changes for Etsy sellers
MTD for Income Tax applies to sole traders and landlords based on their qualifying income. That is turnover before expenses, not profit, and it adds self-employment and property income together. Wages taxed through PAYE do not count. HMRC looks at the figure on your tax return for a given year to decide when you must join.
Once you are in, three things change. You keep digital records in MTD-compatible software. You send HMRC a quarterly update, a summary of income and expenses by category, through that software. And you still submit a tax return by 31 January after the end of the tax year.
If you were over £50,000 for 2024 to 2025, you should already have started from 6 April 2026. You can still sign up if you have not, and an agent can sign you up for you. Our VAT returns and MTD service covers the wider rules.
Quarterly updates
MTD quarterly update deadlines
Each update is cumulative from the start of the tax year. You can use standard periods or calendar quarters, chosen in your software before your first update.
| Standard period | Calendar period | Deadline |
|---|---|---|
| 6 April to 5 July | 1 April to 30 June | 7 August |
| 6 April to 5 October | 1 April to 30 September | 7 November |
| 6 April to 5 January | 1 April to 31 December | 7 February |
| 6 April to 5 April | 1 April to 31 March | 7 May |
Your tax return for the year is still due by 31 January following the end of the tax year.
Hobby or business
Do I pay tax on Etsy in the UK?
You pay tax on Etsy sales if you are trading and your income is above the trading allowance. Making things to sell for a profit is trading. The £1,000 trading allowance covers gross trading income in a tax year, so a maker with £900 of sales has nothing to declare, while one with £1,500 of sales needs to register for Self Assessment, even if materials ate most of it.
If you go over £1,000, register by 5 October after the end of the tax year. You can then deduct either the £1,000 allowance or your actual expenses, whichever is better.
Etsy also reports sellers to HMRC under the digital platform rules, if you make 30 or more sales or receive about £1,700 (€2,000) or more in a calendar year. That is not a new tax. Our guide for eBay sellers covers the badges of trade and platform reporting in more detail.
Your tax bill
How much tax will I pay on my Etsy income?
Your Etsy income is added to your other income, such as a salary, to work out your total income for the tax year. Most people can earn up to the £12,570 Personal Allowance in 2026/27 before paying Income Tax. Above that, Etsy profit is taxed at your usual Income Tax rate, and you also pay Class 4 National Insurance at 6% on self-employed profits between £12,570 and £50,270.
You need to pay tax on profit, not sales. Allowable business expenses come off first: materials, packaging, postage, Etsy fees, equipment and a share of household costs if you work from home. UK Etsy sellers whose trading income is £1,000 or less in a tax year can use the trading allowance instead and pay nothing, but you cannot claim both the allowance and your actual expenses.
Your Self Assessment tax return is due by 31 January after the tax year ends, and the tax bill is paid on the same date. A first-year Etsy business can face a larger bill than expected because of payments on account, so set money aside monthly.
Etsy fees
What Etsy takes from each sale
Etsy pays you the net amount, so most of these never show as a separate cost. Each is allowable against your profit, if you record it.
Payment processing
Etsy Payments takes a processing fee from each order before paying out to your bank.
Offsite Ads and Etsy Ads
Offsite Ads charge a fee on sales Etsy attributes to its external advertising, and become mandatory above a sales level. Etsy Ads are a separate budget you set.
The quieter charges
Currency conversion on overseas sales, the regulatory operating fee and any Etsy Plus subscription. Small individually, noticeable over a year.
Free calculator
Etsy profit per sale calculator
See what a sale earns after Etsy's transaction, processing and listing fees, your materials and postage. Most UK makers are not VAT-registered, so switch that off if it applies to you.
Per sale
- Customer pays
- £0.00
- VAT to HMRC
- £0.00
- Platform fees
- £0.00
- Landed cost
- £0.00
- Postage and advertising
- £0.00
Profit per sale
£0.00
0% margin on net sales
Price needed for a 30% margin: £0.00
An estimate for planning, not tax advice. Default fees are examples checked in October 2026; platforms change rates, so use the figures on your own fee invoices. Offsite Ads fees apply only to sales that come through them. Add them under advertising.
Get your real margins checked
Costing a handmade product
What your product really earns once your time is counted
The most common mistake we see is leaving out the maker's own time. Without it, the margin looks healthy and the hourly rate is a mystery.
| Illustrative product | Amount |
|---|---|
| Sale price | £28.00 |
| Materials, including waste and offcuts | £6.00 |
| Packaging | £1.20 |
| Etsy fees and processing (illustrative) | £3.50 |
| Margin before your time | £17.30 |
| Your time: 45 minutes at £12 an hour | £9.00 |
| Real margin per sale | £8.30 |
Illustrative figures only. Your fees depend on Etsy's current rates and whether Offsite Ads apply to the order.
VAT for Etsy sellers
Watching the VAT threshold
Most Etsy sellers are not VAT-registered, and do not need to be. You must register when your taxable turnover for the last 12 months goes over £90,000, or you expect it to in the next 30 days. It is a rolling test, so check it every month, not once a year.
Registering changes your pricing overnight. On a standard-rated item, one-sixth of a VAT-inclusive price goes to HMRC, so a maker who keeps prices the same takes a margin cut. Plan prices before you cross the line. If your next step is your own website, see our Shopify accountants page.
Sole trader or limited company
Business structure: should an Etsy seller incorporate?
There is no single profit level where a limited company becomes right. It depends on your profit, what you draw, your other income and your plans. We model it for you rather than quote a rule of thumb.
Staying a sole trader
Simplest set-up and lowest running cost- Profits taxed through Self Assessment
- Inside MTD for Income Tax once over the threshold
- No separation between you and the business
A limited company
- Corporation Tax at 19% to 25%, depending on profit
- Limited liability for business debts
- More admin: company accounts and director duties
- Outside MTD for Income Tax for the company's trading profit
Top tips
Five tips for Etsy sellers
- 01
Price with fees on postage in mind
Etsy's transaction fee applies to the postage you charge as well as the item price. Free or cheap postage still carries the fee.
- 02
Cost materials and packaging per item
Work out the cost of materials, packaging and labels for one item, not just the total you spend each month. It is the only way to know which products earn their place.
- 03
Put tax aside every month
Move a share of each month's profit into a separate account. When the Self Assessment bill arrives, the money is already there.
- 04
Keep digital records now
Making Tax Digital for Income Tax applies from April 2026 to sole traders and landlords with qualifying income over £50,000, then over £30,000 from April 2027. Digital records from today make the switch painless.
- 05
Watch the VAT threshold on a rolling basis
VAT registration is based on taxable turnover in any rolling 12 months, currently £90,000, not just your tax year. Check it monthly once sales are growing.
From the accountant
“Many makers price from their materials and forget their own time and Etsy's fee on postage. Run one product through the calculator with your real hours and you will know whether it is paying you properly.”
Key facts for 2026
Etsy seller tax: key facts for 2026
-
£1,000 of gross trading income a year can be received tax-free under the trading allowance, without telling HMRC.
2026/27 tax year. Source: GOV.UK, Tax-free allowances on property and trading income
-
£12,570 is the standard Personal Allowance: the income most people can earn before paying Income Tax.
2026/27 tax year. Source: GOV.UK, Rates and thresholds for employers 2026 to 2027
-
6% is the Class 4 National Insurance rate on self-employed profits between £12,570 and £50,270, with 2% charged above that.
2026/27 tax year. Source: GOV.UK, Rates and allowances: National Insurance contributions
-
£50,000 of qualifying income in 2024/25 brings sole traders and landlords into Making Tax Digital for Income Tax from 6 April 2026.
In force from 6 April 2026. Source: GOV.UK, Find out if and when you need to use MTD for Income Tax
-
6.5% is Etsy's transaction fee on the item price plus postage; UK payment processing is 4% + £0.20 and each listing costs $0.20.
October 2026. Source: Etsy, Fees & Payments Policy
-
30 sales or about £1,700 (€2,000) in a calendar year is the point at which online platforms must report a seller's details and income to HMRC.
2026, rules in force since January 2025. Source: GOV.UK, Reporting rules for digital platforms
Figures checked 9 October 2026. Rates and thresholds change, so check the source before relying on them.
Coming up
Changes coming for Etsy sellers
The MTD for Income Tax threshold falls twice in the next two years, and the Personal Allowance stays frozen until 2031.
-
MTD for Income Tax threshold falls to £30,000
Sole traders and landlords with qualifying income over £30,000 in 2025/26 must keep digital records and send quarterly updates. Online sellers should check their gross sales, not profit, against the threshold.
Source: GOV.UK, Find out if and when you need to use MTD for Income Tax
-
Penalty points for late MTD quarterly updates begin
From the 2027/28 tax year, each late quarterly update earns a penalty point, and four points means a £200 penalty. 2026/27 is the year to get the routine right.
-
MTD for Income Tax threshold falls to £20,000
The threshold drops again, based on 2026/27 income, bringing many smaller Etsy, eBay and side-business sellers into quarterly digital reporting.
Source: GOV.UK, Find out if and when you need to use MTD for Income Tax
-
Personal Allowance stays frozen at £12,570
The Personal Allowance and the £50,270 higher rate threshold are frozen until April 2031, as is the Class 4 National Insurance Lower Profits Limit. As profits grow, more of them are taxed.
Source: GOV.UK, Maintaining Income Tax and NICs thresholds until 5 April 2031
Sole trader accountant
How we get you MTD-ready
- 01
Check your qualifying income
We work out your turnover across Etsy, your own site and any fairs or markets, and when MTD applies to you.
- 02
Set up compatible software
Xero or QuickBooks, included in the fee, with Etsy sales and fees flowing in.
- 03
Sign you up with HMRC
As your agent, we sign you up and connect your software.
- 04
Quarterly updates and year end
We prepare and send each update, then your tax return by 31 January.
Honest fit
Is an Etsy accountant worth it for you?
Our Compliance plan for sole traders covers bookkeeping, MTD quarterly updates, your tax return and VAT if you need it. It suits makers with steady sales, makers inside or close to MTD, and anyone selling across Etsy, their own site and markets who wants it in one place.
If you sell a few hundred pounds a year, you probably do not need us yet, and we will say so. See the full pricing to compare plans, or book a discovery call and we will tell you honestly whether we are the right fit.
Example dashboards
What your Etsy numbers look like with us
Profit by product after Etsy's fees, materials and postage, and Etsy alongside any other channel you sell on.
eCounts client dashboard Sample data
Channel P&L
1 to 31 August 2026 · margin after landed COGS
Revenue
£97,500
▲ 5.9% on July
Landed COGS
£60,110
incl. freight & duty
Gross margin
38.3%
£37,390 gross profit
Channels
5
reconciled to payouts
- Shopify
- Amazon FBA
- eBay
- Etsy
- TikTok Shop
| Channel | Revenue | Gross profit | Margin |
|---|---|---|---|
| Shopify | £38,420 | £17,290 | 45.0% |
| Amazon FBA | £28,140 | £8,720 | 31.0% |
| eBay | £15,610 | £5,310 | 34.0% |
| Etsy | £9,170 | £3,760 | 41.0% |
| TikTok Shop | £6,160 | £2,310 | 37.5% |
SKU profitability
August 2026 · per unit, net of VAT
Yoga mat 6mm on Amazon FBA is now at 7.0% margin. Landed cost rose £1.11 a unit after the July shipment's freight increase. Same product on Shopify: 30.7%.
| Product | Channel | Units | Price | Landed cost | Fees & ads | Profit / unit | Margin |
|---|---|---|---|---|---|---|---|
| Yoga mat 6mmYM-6MM-PUR | Amazon FBA | 640 | £20.83 | £11.95 | £7.42 | £1.46 | 7.0% |
| Yoga mat 6mmYM-6MM-PUR | Shopify | 410 | £23.33 | £11.95 | £4.22 | £7.16 | 30.7% |
| Cork block, pairCB-CORK-2 | Shopify | 520 | £12.49 | £3.20 | £2.95 | £6.34 | 50.8% |
| Resistance bands, set of 5RB-SET-5 | Amazon FBA | 880 | £16.66 | £4.10 | £6.38 | £6.18 | 37.1% |
| Foam roller 45cmFR-45 | eBay | 300 | £20.83 | £7.80 | £6.10 | £6.93 | 33.3% |
| Meditation cushionMC-BUCK | Etsy | 190 | £29.16 | £9.40 | £5.20 | £14.56 | 49.9% |
| Water bottle 750mlWB-750 | TikTok Shop | 410 | £12.49 | £4.60 | £2.90 | £4.99 | 40.0% |
Margin bands: under 15% red, 15 to 30% amber, over 30% green.
Example figures for illustration. Your dashboards are built from your own reconciled data. See it with your numbers.
Pricing
Sole trader accountant pricing
Most Etsy sellers sit on Compliance. Makers selling across several platforms with stock to track may suit Basic or Growth.
- Usual fit
Compliance
£250/mo
Sole trader. £590/mo ltd company.
Basic
£350/mo
Single platform, up to 500 orders.
Growth
£700/mo
Multi-platform.
Scale
£2,500+/mo
Seven-figure operations.
Fractional FD
£4,500+/mo
Everything included.
How much can you sell on Etsy before paying tax? 
Up to £1,000 of gross trading income a year is covered by the trading allowance, with no tax to pay and no need to tell HMRC. Above that, you register for Self Assessment and pay tax on your profit.
Can I do my own MTD for Income Tax?
Yes. You can keep digital records and send quarterly updates yourself using MTD-compatible software, or authorise an accountant to do it for you.
Do I pay tax on Etsy sales in the UK?
Yes, if you are trading and your gross trading income is over £1,000 in a tax year. Below that, the trading allowance means you do not need to tell HMRC. Above it, register for Self Assessment by 5 October after the tax year ends.
Does MTD for Income Tax apply to me?
It applies if your qualifying income, meaning self-employment and property turnover before expenses, is over the threshold. That is £50,000 from April 2026, £30,000 from April 2027 and £20,000 from April 2028, each based on an earlier year's tax return.
Does Etsy sort out my tax?
No, Etsy reports your sales to HMRC but does not pay your Income Tax. You are responsible for registering, keeping records and filing your own returns.
Is the £1,000 trading allowance £1,000 of profit?
No, it is £1,000 of gross trading income before expenses. A maker with £1,500 of sales and £1,200 of costs is still over the allowance and needs to register.
Do I need to register as self-employed for Etsy?
You need to register for Self Assessment if your gross trading income is over £1,000 in a tax year. The deadline is 5 October after the end of that tax year.
How should I price my handmade products?
Start from full cost: materials including waste, packaging, Etsy fees, a share of equipment and workspace, and your own time at a rate you choose. A price that only covers materials and fees can look profitable while paying you very little per hour.
