Etsy Tax Guide 2026/27
Last updated: March 2026 — Rates for the 2026/27 tax year
Etsy is a global marketplace focused on handmade, vintage, and craft items. UK sellers use Etsy to sell everything from jewellery and art prints to personalised gifts and digital downloads. It attracts buyers looking for unique, non-mass-produced goods.
How Much Tax Will You Pay on Etsy Income?
As a self-employed Etsy worker you pay Income Tax and Class 4 National Insurance on your profits — not your gross earnings. The £1,000 trading allowance means the first £1,000 of income is tax-free. Above that, you deduct either the allowance or your actual expenses, whichever is higher, to arrive at your taxable profit. Use our side hustle tax calculator to get an instant estimate for 2026/27.
Basic rate taxpayer
20% + 9%
Income Tax + Class 4 NI on profit above £12,570
Higher rate taxpayer
40% + 9%
On profit between £50,270 and £125,140
Trading allowance
£1,000
Tax-free — no Self Assessment below this
Allowable Expense Deductions for Etsy
These expenses reduce your taxable profit. Keep receipts for all claims.
Tax Tips for Etsy Workers
- Etsy sellers making handmade goods are almost always trading, so you will likely need to register as self-employed if you earn over £1,000.
- SEO matters hugely on Etsy — research keywords that buyers use and include them in your titles, tags, and descriptions.
- Offer digital downloads (printables, templates, SVG files) for passive income with no postage costs.
- Factor in all Etsy fees when pricing — the combined fees can total 12–15% of the sale price.
Frequently Asked Questions
Is selling on Etsy considered self-employment?▾
Yes, in most cases. If you are making items to sell or buying vintage items to resell, you are trading and must register as self-employed with HMRC if your income exceeds the £1,000 trading allowance. You will need to file a Self Assessment tax return and pay income tax and National Insurance on your profits.
How do Etsy fees affect my tax?▾
Etsy fees (listing fees, transaction fees, payment processing fees, and advertising costs) are all allowable business expenses that reduce your taxable profit. Keep records of all fees — Etsy provides a monthly statement in your Payment Account dashboard that you can use for your tax return.
Do I need to charge VAT on Etsy sales?▾
You only need to register for and charge VAT if your taxable turnover exceeds the VAT threshold (£90,000 per year). Below this threshold, VAT registration is voluntary. Etsy itself charges VAT on its fees to UK sellers, and this is shown on your Etsy fee invoices.
Related Tools & Guides
Benefits Calculator
Low Etsy earnings? Check Universal Credit and other benefit entitlements.
Take-Home Pay Calculator
Also have a PAYE job? See your combined income after all deductions.
Side Hustle Tax Guide 2026
Complete guide to Self Assessment, the trading allowance, and Class 4 NI.
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