If you sell on Etsy, eBay, Vinted, Amazon, or any other UK marketplace, you are trading — and MTD Income Tax applies to your trading income. From April 2026, if your qualifying income exceeds £50,000, you must use HMRC-recognised software to keep digital records and submit quarterly updates. Here is what online sellers need to know.
Does MTD apply to online sellers?
Yes. MTD Income Tax applies to anyone with qualifying self-employment income — and selling goods or services online counts as self-employment. Whether you sell on Etsy as a hobby, run an eBay side-hustle, or operate a full-time Amazon FBA business, the same rules apply:
- Income above £50,000 from April 2026: MTD is mandatory.
- Income between £30,000 and £50,000 from April 2027: MTD becomes mandatory.
- Income below £30,000: MTD is voluntary but recommended.
Qualifying income is your gross trading income (before expenses), not your profit. If you sell £55,000 worth of goods on eBay in a tax year, you are in scope — even if your profit is much lower.
What records do online sellers need?
Under MTD, you must keep digital records of:
- All income — sales revenue, shipping charges received, refunds received.
- All expenses — stock purchases, packaging, platform fees (Etsy fees, eBay final value fees, Amazon referral fees), shipping costs, home office costs.
- Bank transactions — all business-related bank and payment account activity.
Spreadsheets alone are not sufficient. You must use HMRC-recognised software that submits quarterly updates via the MTD API.
Which MTD software is best for online sellers?
Xero — most flexible for online sellers
Xero’s 1,000+ integrations include connections to eBay, Etsy, Shopify, Amazon, and WooCommerce. If you sell across multiple platforms, Xero can pull in transaction data automatically. At £7/month (Xero Simple), it is the most affordable full-featured option.
QuickBooks — best mobile app
QuickBooks has the best mobile app for capturing receipts, mileage, and expenses on the go. If you source stock from car boot sales, wholesakers, or markets, the receipt scanning is genuinely useful. The £10/month Sole Trader plan is MTD-recognised.
Quarterly deadlines for online sellers
The same quarterly deadlines apply to online sellers as to any other sole trader. For the 2026/27 tax year, submit by:
| Quarter | Period | Deadline |
|---|---|---|
| Q1 | 6 Apr – 5 Jul 2026 | 7 August 2026 |
| Q2 | 6 Jul – 5 Oct 2026 | 7 November 2026 |
| Q3 | 6 Oct 2026 – 5 Jan 2027 | 7 February 2027 |
| Q4 | 6 Jan – 5 Apr 2027 | 7 May 2027 |
Practical tips for online sellers
- Separate your accounts. Use a dedicated business bank account for your selling income and expenses. This makes bookkeeping much easier.
- Download platform reports monthly. Etsy, eBay, and Amazon all let you download CSV reports of your sales and fees. Import these into your MTD software.
- Track stock costs separately. Stock is an expense, not income. Record what you paid for goods separately from what you sold them for.
- Don’t forget fees. Platform fees, payment processing fees, and shipping costs are all allowable expenses. Track them to reduce your tax bill.