Etsy Seller Tax Calculator
Selling items you make on Etsy is trading, even as a hobby. The first £1,000 of sales is tax-free; above that, deduct materials, fees and postage, or the £1,000, and pay tax on the profit.
What this calculator does
It is built for makers: people who sell crafts, prints, jewellery, digital downloads or other things they make. Enter your sales for the tax year, the number of orders, what your materials cost, your Etsy and payment fees and postage, and your other costs. It tests the £1,000 trading allowance, picks the better deduction, shows the Income Tax and Class 4 National Insurance on the profit and runs the platform reporting check.
Making things to sell is trading
gov.uk says you are probably trading if you sell goods that you made, including items you make for a hobby. That is different from selling your own unwanted belongings, which are unlikely to be taxable. This calculator therefore treats your Etsy sales as trading, and the selector is set to buying or making items to sell.
The £1,000 trading allowance
Up to £1,000 of gross trading income in a tax year is tax-free, and you generally do not need to tell HMRC if you stay at or under it. It is tested on sales before costs, and it is one figure across all your trading, so Etsy sales add to any markets, commissions or other online shops. Above £1,000 you register for Self Assessment by 5 October after the tax year ends.
Materials, fees and postage
Over the allowance, you can deduct your actual costs: the materials and supplies for what you sold, Etsy's fees, payment processing fees, postage and packaging, and the other costs of running the shop, such as a label printer or product photography. Or you can deduct the £1,000 allowance instead. You cannot do both, and the calculator picks the lower profit. Makers with real material costs nearly always do better deducting actual costs.
Does Etsy report to HMRC?
Digital platforms report sellers of goods to HMRC unless the seller makes fewer than 30 sales and receives no more than €2,000 (about £1,700) in a calendar year. Reporting is separate from tax: gov.uk says it does not automatically mean you owe tax. Platforms use calendar years, so your Etsy total will not match your tax-year figure exactly.
How the tax is worked out
Profit is added to your other income. Income Tax is the extra tax it causes, using the Personal Allowance of £12,570 and the 20%, 40% and 45% bands. Class 4 National Insurance is 6% on profit between £12,570 and £50,270 and 2% above that. Class 2 is voluntary if profit is below £7,105.
A worked example
A maker on a £30,000 salary sells £8,000 of products on Etsy. Materials cost £1,800, fees and postage £900 and other costs £300, so costs are £3,000 and the profit is £5,000. That profit is taxed at 20%, so Income Tax is £1,000, and there is no Class 4 National Insurance because the profit is below £12,570. After costs and tax, £4,000 is left from the £8,000 of sales.
What this calculator does not cover
It does not cover VAT, selling digital products to overseas buyers, a workspace at home, student loan repayments or Scottish rates. It uses England, Wales and Northern Ireland bands. It is an estimate, not advice.
Questions about the etsy seller tax calculator
Do I pay tax on Etsy sales?
Selling things you make is trading. The first £1,000 of gross sales in a tax year is covered by the trading allowance. Above that you pay Income Tax and Class 4 National Insurance on the profit.
Do I need to register as self-employed for Etsy?
If your trading sales are over £1,000 in a tax year, register for Self Assessment by 5 October after the tax year ends.
Can I deduct materials and Etsy fees?
Yes, if you deduct actual costs instead of the £1,000 allowance. Materials, fees, postage and packaging all count as costs of the trade.
Does it matter if Etsy is only a hobby?
gov.uk says goods you make, including items made for a hobby, are likely to be trading if you sell them for a profit.
Does Etsy report sellers to HMRC?
Platforms report sellers of goods with 30 or more sales, or more than about £1,700 (€2,000), in a calendar year. It is a report, not a tax bill.
Is the allowance per shop?
No. It is one £1,000 figure for all your trading income, across every platform and shop.