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If you sell items online through platforms like TikTok Shop, Etsy, eBay, Vinted, Facebook Marketplace, or Depop, whether it’s handmade goods, secondhand clothing, or product reselling, you may need to report that income to HMRC.
In addition, with Making Tax Digital (MTD) coming soon, the rules around tax reporting are changing.
Even if it’s a side hustle or something you do casually, HMRC may classify your activity as self-employment. This means you may need to register, maintain digital records, and submit quarterly updates using HMRC-approved software, rather than just one tax return per year. Jump to thresholds and key dates.
Quick facts:
At Cutter & Co, we help individuals and small business owners stay on top of tax changes without the stress. If you’re unsure whether the rules apply to you or what to do next, we’re here to help.
If you earn more than £1,000 a year from selling online, you may need to register as self-employed and report that income to HMRC, even if it’s not your full-time job.
Some common examples:
It doesn’t matter if you only sell part-time, or if it’s “just a bit of extra cash”, if your total sales (not profit) go over £1,000, you’ll likely need to register.
This is part of HMRC’s trading allowance rules. You can read more about them on here: https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income.
If you’re not sure whether what you do counts as a business, it’s best to get advice. We can help you understand what applies to your situation and ensure you’re not caught off guard by new rules.
Making Tax Digital (MTD) is a government initiative to modernise the tax system by moving it online. Instead of submitting a single tax return each year, individuals and businesses will need to:
You’ll need to record your income and expenses using digital tools. Spreadsheets alone won’t be enough.
This software must be able to send updates directly to HMRC. Options include Sage, QuickBooks, Xero, KashFlow and others. Read our guide on choosing the right software for Making Tax Digital, or view the official list of compatible software.
Instead of filing one tax return a year, you’ll send quarterly summaries and then a final end-of-year statement through your software.
MTD is already in place for VAT-registered businesses. From April 2026, it will begin to apply to self-employed people and landlords, including those who sell online.
You can find a complete MTD step-by-step guide on the HMRC website.
Making Tax Digital is being introduced gradually, and it will soon apply to millions of self-employed individuals across the UK.
Here’s when you’ll need to comply:
If your income is below £20,000, you won’t need to follow MTD rules — for now.
This means if you’re running a busy Etsy shop, making regular sales through TikTok Shop, or earning income from reselling, MTD could apply to you sooner than you think.
For official updates, visit the news and communication section of GOV.UK.
Making Tax Digital might feel like a big change, especially if you’re just getting started with selling online. But once you’re set up, it can make managing your tax simpler and less stressful.
Here’s how it can help:
Say goodbye to piles of receipts and manual spreadsheets. MTD encourages cleaner, more consistent digital records.
Using approved Making Tax Digital: Software reduces the risk of common errors, which can help you avoid penalties or missed deadlines. An independent report published in 2021 found 67% of businesses reported that MTD reduced the potential for mistakes in their record keeping.
Quarterly updates may sound like more administrative work at first, but once your system is in place, many businesses find it easier to stay on top of things – no more last-minute scrambling at tax year-end.
Many MTD-compatible tools offer real-time insights, so you can see how your business is performing at any point in the year.
Staying ahead of tax deadlines and knowing your records are HMRC-compliant gives you confidence and security.
Whether you’re selling through TikTok Shop, Etsy, eBay or elsewhere, Making Tax Digital could soon apply to you, even if you’re not officially registered as self-employed yet.
At Cutter & Co, we make the transition simple. We’ll help you:
Not sure where to start, or want to find out more about Making Tax Digital? Book a consultation today.
Yes. If you’re earning income through any online platform and it exceeds the MTD threshold, that income counts as self-employment and is subject to MTD.
If you're regularly earning income online, you may already be classed as self-employed by HMRC. It’s best to speak to an accountant to clarify your status and avoid penalties later.
There are a range of HMRC-recognised tools suitable for small businesses. Cutter & Co can help you choose one that fits your budget and makes tax reporting easy.
MTD is a government initiative that requires individuals and businesses to keep digital records and submit tax returns online using approved software. It aims to make the tax system easier and more accurate.
From April 2026, if your total self-employment and property income is over £50,000.
From April 2027, if your total self-employment and property income is over £30,000.
From April 2028, if your total self-employment and property income is over £20,000.
Yes. If your property income pushes your total income over £50,000 from April 2026, over £30,000 in April 2027 , and over £20,000 in April 20208, you’ll need to follow MTD rules.
Your income from both sources is added together. If the combined total is over £50,000 from April 2026, or £30,000 from 2027, or over £20,000 from April 20208, you’ll need to comply with MTD for Income Tax.
You can use spreadsheets, but they must be linked to HMRC-recognised software to submit your data digitally. Manual entry is no longer allowed for MTD submissions.
You’ll need HMRC-recognised software such as Xero, Sage, QuickBooks, or KashFlow. HMRC have a list of commercial software that works with Making Tax Digital. Cutter & Co can also help you choose and set it up.
If your income is over £50,000, you'll start submitting quarterly updates from April 2026. If your income is over £30,000, the start date is April 2027. If your income is over £20,000, the start date is April 2028.
Yes — but instead of one big return at the end of the year, you'll submit quarterly updates and then a final end-of-year declaration via MTD-compatible software.
You could face penalties or fines for non-compliance. HMRC plans to introduce a points-based penalty system for late submissions under MTD.
We’ll explain what MTD means for you, recommend the right software, help you get set up, and take care of submissions — so you can stay compliant without the stress. You can contact us to book a consultation.
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