Etsy Tax UK 2026: Fees, VAT, HMRC and US Tariffs

Short answer: Etsy tax for UK sellers comes down to three things. Income tax: making or buying things to sell is trading, and you pay tax on your profit once your trading income is over £1,000 a tax year. Fees: Etsy takes about 12% of a typical order in listing, transaction, processing and regulatory fees, and adds VAT on top unless you’ve given it a VAT number. Collection: Etsy collects sales tax on US orders and VAT on small EU orders for you, but not UK VAT on your UK sales.

This guide is the broad “Etsy tax UK” page: what HMRC sees, what Etsy’s fees cost after VAT, what to report as profit, and how VAT, IOSS and US tariffs work on orders abroad. If you’re already VAT-registered and need to configure your shop, go to the Etsy VAT setup guide. For other platforms, see Vinted tax and eBay tax.

Etsy tax UK at a glance

Question	Answer for a typical UK maker
Do I pay income tax on Etsy sales?	Yes, on your profit, once trading income is over £1,000 a tax year and total income is over £12,570
When do I tell HMRC?	Register for Self Assessment by 5 October after the tax year your trading income went over £1,000
Does Etsy report me to HMRC?	Yes, at 30 sales or about £1,700 in a calendar year, or any made-to-order digital sale
Does Etsy charge VAT on its fees?	Yes, unless you’ve added a VAT number
Does Etsy collect UK VAT on my UK orders?	No. If you’re VAT-registered, that’s your job
Does Etsy collect VAT on EU orders?	Yes, on parcels worth €150 or less, through its IOSS number
Does Etsy collect US sales tax?	Yes, in every state where it applies
Who pays US import duty?	Effectively you. Etsy requires duty-paid (DDP) shipping to the US for Purchase Protection
When do I register for VAT?	When your sales across all channels pass £90,000 in any rolling 12 months

Do I have to pay tax on Etsy sales?

If you’re making candles, prints, jewellery or ceramics to sell, or buying vintage or craft supplies to resell, you’re trading. HMRC’s Tax Help for Hustles campaign lists selling handmade items and digital designs as typical examples. The exception is selling your own unwanted belongings, such as a vintage dress you bought years ago to wear. That isn’t trading.

As a trader:

• The first £1,000 is tax-free. The trading allowance covers up to £1,000 of trading income a tax year (6 April to 5 April), with no need to tell HMRC. It’s income before costs, and it’s one allowance across Etsy, your website, market stalls and everything else. See our trading allowance guide.
• Over £1,000, you register for Self Assessment by 5 October after the end of that tax year (gov.uk), and file online and pay by 31 January.
• You’re taxed on profit, not sales. Etsy fees and the VAT on them, materials, packaging, postage and a share of household costs come off. See allowable expenses for online sellers.
• Income tax is 20% at the basic rate once your total income is over the £12,570 personal allowance (gov.uk). Class 4 National Insurance is 6% on self-employed profits between £12,570 and £50,270 (gov.uk).

You may have seen headlines about the limit rising to £3,000. The government has announced plans for a simpler online service for trading income between £1,000 and £3,000, but HMRC says it’s expected by 2029. Until then, over £1,000 means Self Assessment.

Watch this date: figures on this page are current on 28 October 2026, the day of the Autumn Budget 2026. We’ll update this page if the Budget changes any of them.

Does Etsy report to HMRC?

Yes. Since 1 January 2024, Etsy has followed the UK’s digital platform reporting rules (Platform Operators Regulations 2023), the same rules that apply to Vinted and eBay. Etsy’s help page, What information does Etsy report for sellers in the EU, UK and Canada, sets out the details:

	Etsy’s HMRC reporting
Who’s reported	Sellers with 30 or more sales of physical items in a calendar year, or about £1,700 or more after taxes and fees, or any sales of made-to-order digital items
What Etsy collects	Full name, address, date of birth, payout bank account, tax ID, and your VAT number if you have one. Companies also give their registration number
What Etsy reports	Number of sales, and the amount paid to you each quarter (gross sales minus refunds, fees and taxes Etsy collected), plus the fees Etsy charged
When	Yearly. You get a PDF of what Etsy reported by 31 January
If you don’t respond	Etsy puts your shop into Vacation Mode until you confirm your details

Three things to know:

1. Reported doesn’t mean taxed. HMRC’s press release No tax changes for online sellers is clear that the rules share data and don’t create a new tax.
2. Etsy’s figure won’t match your tax return. Etsy reports what was paid to you after fees, by calendar year. Your tax return needs your gross sales for the tax year, with fees claimed as an expense. The worked example below shows the difference.
3. Most makers are trading anyway. If you’ve been selling handmade goods over £1,000 a year without filing, the reporting rules make it likely HMRC will notice.

Etsy fees UK

Here’s what Etsy charges a UK seller, from Etsy’s fees help page, its payment processing fees page and its regulatory operating fee page:

Fee	UK rate	Charged on	VAT added?
Listing fee	$0.20 per listing, about 15p to 16p depending on the exchange rate	Each listing, for 4 months or until it sells. Each extra unit sold and each auto-renewal costs another $0.20	Yes, unless you’ve added a VAT ID
Transaction fee	6.5%	The order total, including postage and gift wrap	Yes, unless you’ve added a VAT ID
Payment processing fee	4% + £0.20 per order	The order total, including postage	Yes, unless you’ve added a VAT ID
Regulatory operating fee	0.48%	Item price, postage and gift wrap, excluding tax Etsy collects	Yes, unless you’ve added a VAT ID
Offsite Ads	15%, or 12% once your shop has made $10,000 in a 365-day period, capped at $100 per order	Orders from a buyer who clicked an Etsy ad on another site within 30 days	Yes, unless you’ve added a VAT ID
Etsy Ads (optional)	Your daily budget	Clicks on ads inside Etsy	Yes, unless you’ve added a VAT ID
Currency conversion	2.5%	Sales when your listing currency differs from your bank account currency	Etsy doesn’t say. Check your monthly VAT invoice
Shop set-up fee	One-off, varies by country	Shown before you finish opening a new shop	Etsy doesn’t say. Check your monthly VAT invoice

Etsy’s fees policy lists all fees excluding VAT. A few things catch new sellers out:

• You pay fees on postage too. The transaction and processing fees apply to the whole order, so free-shipping pricing and charged postage cost the same in fees.
• Offsite Ads become compulsory. You can opt out only while your shop has never made $10,000 in any 365-day period. Once you pass that, you’re in for good, at the lower 12% rate (Etsy: how Offsite Ads work).
• The regulatory operating fee went up. It was 0.32% for UK sellers and is now 0.48%.
• Listing fees are in US dollars, so the sterling cost moves with the exchange rate.

On a typical £40 order with no ads, the fees come to about £4.75, or roughly 12%: 6.5% transaction (£2.60), 4% + 20p processing (£1.80), 0.48% regulatory (£0.19) and a listing fee of about 16p. Add VAT and it’s about £5.70, roughly 14%.

VAT on Etsy fees

UK sellers contract with Etsy Ireland UC (Etsy Terms of Use), and whether Etsy charges you VAT on fees depends on one setting: whether you’ve added a VAT number to your account. Etsy explains this in How VAT is collected on seller fees.

Your status	What Etsy does	What it means for you
Not VAT-registered (most small shops)	Charges VAT on your seller fees and processing fees, deducted from your balance	A real cost. Claim the fees including VAT as an expense on your tax return
VAT-registered, VAT ID added	Doesn’t charge VAT. Sends a monthly invoice confirming VAT wasn’t charged	You account for the VAT under the reverse charge: output VAT and input VAT for the same amount on your VAT return, so it usually nets to zero
VAT-registered, VAT ID not added	Keeps charging VAT	You’re paying VAT you can’t reclaim properly. Add your VAT ID (see the Etsy VAT setup guide)

Etsy’s monthly VAT invoices appear on the first of each month for the previous month, as a PDF download in your Payment account. Keep them with your records.

The reverse charge and the VAT threshold

Because Etsy bills from Ireland, its fees are services from an overseas supplier. Under HMRC’s VAT Notice 741A, a business that receives such services must, in working out whether it has to register for VAT, add their value to its own taxable sales. For a shop near £90,000, a year of Etsy fees could tip you over earlier than you’d expect. Sellers report getting different answers from HMRC on exactly which Etsy fees count, so take advice if you’re close. Our VAT threshold guide explains the reverse charge trap.

What Etsy collects for you, and what it doesn’t

Etsy collects some taxes from buyers and pays them on your behalf. These amounts never count as your income. Etsy sets out the rules in Custom fees and physical VAT collection:

Order	Who handles the tax?
UK seller, goods in the UK, UK buyer	You, if you’re VAT-registered. Etsy doesn’t collect UK VAT on these orders
Seller based outside the UK, any UK order	Etsy collects UK VAT
Goods sent into the UK from abroad, parcel worth £135 or less	Etsy collects UK VAT
UK seller to an EU buyer, parcel worth €150 or less	Etsy collects EU VAT through its IOSS number
UK seller to an EU buyer, over €150	The buyer pays VAT and duty at import, unless you ship duty-paid
UK seller to a US buyer	Etsy collects US sales tax. Import duty is separate (see US tariffs)

The common mistake: assuming Etsy deals with UK VAT because it deals with VAT elsewhere. For a UK-based seller shipping within the UK, Etsy doesn’t. Once you’re registered, you owe VAT on your UK Etsy sales and report it on your VAT return. The Etsy VAT setup guide covers how to configure your shop and listings.

Etsy’s IOSS number on EU orders

For EU orders worth €150 or less (excluding delivery), Etsy charges the buyer EU VAT at checkout and pays it through its own IOSS (Import One-Stop Shop) registration. You don’t need your own IOSS number for Etsy sales. You do need to make sure the number reaches customs:

• Etsy postage labels send Etsy’s IOSS number electronically for you.
• Labels bought elsewhere: ask your courier to send the IOSS number electronically. Etsy shows it next to eligible orders on the Orders page and in order confirmation emails. Don’t write it on the parcel, and do show the order’s net value in euros on the front of the package.
• If it goes wrong, your buyer may be asked to pay VAT again on delivery.

From 1 July 2026, Etsy says a €3 customs duty per item applies to EU orders under €150, on top of VAT. How it’s collected depends on the delivery provider. If you also sell to the EU through your own website, you’ll need your own arrangements: see selling to EU consumers from the UK and the IOSS intermediary comparison.

US sales tax on Etsy orders

Etsy calculates, collects and pays US sales tax, and certain state fees, on orders delivered to states where they apply, wherever the seller is. You don’t register or file in the US for your Etsy sales. For sales through your own store, US rules are different: see the US sales tax guide for foreign sellers.

Etsy US tariffs: shipping to US buyers from the UK

The US suspended its $800 de minimis exemption for every country on 29 August 2025 (White House), and it’s still suspended. Every parcel to a US buyer now goes through customs and can owe import duty, however cheap it is. Sales tax, which Etsy collects, doesn’t cover this.

Etsy’s response, from its help page on managing international packages:

• Delivered duty paid (DDP) is required for Purchase Protection. US orders must be shipped DDP to qualify. Under DDP you prepay duties and import fees when you buy the label, so your buyer isn’t surprised by a bill at the door.
• Royal Mail DDP labels are on Etsy. UK sellers can buy Royal Mail International Tracked DDP labels directly. Evri labels to the US are suspended on Etsy. DHL and UPS offer DDP if you buy labels from them directly.
• US parcels need a 10-digit HTS code. Parcels without one may be delayed or returned.

What this means for your tax:

• Duty you prepay is a business expense, deductible from your profit like postage.
• Price it in. A DDP label costs more than a standard one. Many UK makers raise US prices or postage charges to cover duty.
• It’s not VAT. US duty has nothing to do with your UK VAT return. US exports from the UK are zero-rated for UK VAT, and they still count towards your £90,000 threshold.

For a fuller guide to duties, tariff codes and couriers, see selling to US customers from the UK and the end of Section 321 de minimis.

How to sell on Etsy UK: the tax side of getting started

Opening an Etsy shop is quick. Here’s the tax side, in order:

1. You’re a sole trader by default. There’s nothing to register on day one. A limited company is optional and usually only worth it later: see sole trader or limited company.
2. Fill in Etsy’s legal and tax information. Etsy needs your details for HMRC reporting. Have your National Insurance number ready.
3. Price for fees, VAT on fees and postage. Budget for roughly 14% of each order to go to Etsy once VAT on fees is included, more with Offsite Ads.
4. Keep records from the first sale. Download your monthly Etsy statement and VAT invoice. Keep receipts for materials, packaging and postage.
5. Track your trading income by tax year. Once it’s over £1,000, register for Self Assessment by the following 5 October.
6. Shipping abroad? Use Etsy labels or DDP services for the US. Check whether you need an EORI number.
7. Watch the £90,000 VAT threshold across every channel, including your website and markets. The VAT threshold guide explains the test.

Worked examples

Hannah’s monthly Etsy statement

Hannah makes ceramics in Falmouth and sells them on Etsy. She’s not VAT-registered. In March 2027 she has 40 orders, all to UK buyers, worth £2,400 in total including postage she charged. Two orders, worth £120 together, came through Offsite Ads. She renewed 40 listings when items sold, and $0.20 converted to about 16p that month.

Fee	Working	Amount
Listing fees	40 × £0.16	£6.40
Transaction fees	£2,400 × 6.5%	£156.00
Payment processing	(£2,400 × 4%) + (40 × £0.20)	£104.00
Offsite Ads	£120 × 15%	£18.00
Regulatory operating fee	£2,400 × 0.48%	£11.52
Fees before VAT		£295.92
VAT on fees	£295.92 × 20%	£59.18
Total Etsy fees		£355.10

Etsy pays out £2,400 − £355.10 = £2,044.90. That’s 14.8% gone to Etsy, higher than usual because of the Offsite Ads orders.

Her other costs that month: clay and glazes £310, packaging £85, postage labels £260, and £70 for her share of the kiln’s electricity.

Profit for March: £2,044.90 − £310 − £85 − £260 − £70 = £1,319.90

For her tax return, the right way to record this is £2,400 of income and £1,080.10 of expenses (£355.10 Etsy fees + £725 other costs). Not £2,044.90 of income. The profit is the same either way, but gross figures are what HMRC asks for, and they’re what count for the £1,000 trading allowance, the £90,000 VAT threshold and Making Tax Digital.

Hannah’s tax year

Over the 2026 to 2027 tax year, Hannah’s months average out like March. Etsy is her only income.

	Amount
Sales, including postage charged	£28,800
Etsy fees including VAT	£4,261.20
Materials, packaging, postage and electricity	£8,700.00
Taxable profit	£15,838.80

• Income tax: (£15,838.80 − £12,570) × 20% = £653.76
• Class 4 National Insurance: (£15,838.80 − £12,570) × 6% = £196.13
• Class 2 National Insurance: nothing to pay. Profits of £7,105 or more are treated as paid
• Total: £849.89, due by 31 January 2028

Her Etsy HMRC report for calendar year 2026 will show a lower figure than £28,800, because it deducts fees, and it covers January to December. That’s expected.

Two more things follow from her numbers:

• VAT: £28,800 is far below £90,000, so no VAT registration is needed. Etsy keeps charging VAT on her fees, so she claims them at £4,261.20, VAT included.
• Making Tax Digital for Income Tax: her qualifying income for 2026 to 2027 is her gross £28,800. That’s over £20,000, so she’ll need to use MTD for Income Tax from 6 April 2028. See our MTD for Income Tax guide.

If Hannah were VAT-registered

Suppose Hannah’s business had passed £90,000 and she’d registered and added her VAT ID to Etsy. For the same March:

• Etsy fees: Etsy charges £295.92 with no VAT. She records reverse-charge VAT of £59.18 as both output and input VAT, so it nets to zero.
• Her sales: Etsy doesn’t collect UK VAT on her UK orders, so £2,400 of VAT-inclusive sales contains £400 of VAT she owes HMRC (£2,400 × 1/6).

That £400 a month is why sellers approaching £90,000 need to think about prices before they register. See the Etsy VAT setup guide for the switch-over.

Where GoodVat fits in

GoodVat doesn’t file Self Assessment or handle income tax. Use your accounting software or an accountant for that. We take care of VAT as your Etsy shop grows:

• Tracking your rolling 12-month turnover across Etsy, Shopify, WooCommerce, Amazon and more through live integrations, and warning you before you reach £90,000
• Registering you for VAT in the UK, and abroad where you need it
• Calculating the right VAT on your own-store sales, so your Etsy and website sales line up
• Filing your Making Tax Digital VAT returns, with Etsy sales and reverse-charge fees reported correctly

Etsy shop growing fast?

Tell us where you sell and roughly what you turn over. We’ll show you when you’re likely to cross the £90,000 VAT threshold, how Etsy’s fees and the reverse charge affect it, and what registering means for your prices. Then we handle registration and VAT returns for you.

Ask a tax expertor email hello@goodvat.com

A real person replies within one business day

FAQ

Do I have to pay tax on Etsy sales in the UK?

If you make or buy things to sell on Etsy, that’s trading. The first £1,000 of trading income in a tax year is tax-free under the trading allowance. Above £1,000 you register for Self Assessment and pay income tax on your profit once your total income is over the £12,570 personal allowance. Selling your own unwanted vintage items isn’t trading.

What are Etsy’s fees in the UK?

A $0.20 listing fee per item (charged in US dollars), a 6.5% transaction fee on the order total including postage, a payment processing fee of 4% + £0.20 per order, and a 0.48% regulatory operating fee for UK sellers. Offsite Ads cost 15% or 12% on orders they bring in. Etsy adds VAT to its fees unless you’ve given it a VAT number.

Does Etsy charge VAT on its fees?

Yes, for UK sellers who haven’t added a VAT number to their Etsy account. If you’re VAT-registered and add your VAT ID, Etsy stops charging VAT on fees and you account for it yourself under the reverse charge, which usually nets to zero on your VAT return.

Does Etsy report to HMRC?

Yes. Etsy reports UK sellers who make 30 or more sales of physical items, or about £1,700 or more, in a calendar year, and anyone who sells made-to-order digital items. It sends HMRC your name, address, date of birth, bank account, tax ID and what you were paid each quarter. Being reported doesn’t mean you owe tax.

Does Etsy collect VAT on UK orders?

Not for UK-based sellers shipping from the UK to UK buyers. Etsy only collects UK VAT when the seller is based outside the UK, or the goods are sent from abroad in a parcel worth £135 or less. If you’re a VAT-registered UK seller, you account for VAT on your UK Etsy sales yourself.

What is Etsy’s IOSS number and do UK sellers need one?

Etsy collects EU VAT on orders to EU buyers worth €150 or less, using its own IOSS registration. You don’t need your own IOSS number. You need to make sure your courier sends Etsy’s IOSS number electronically with the parcel. Etsy postage labels do this automatically. Don’t write the number on the package.

Who pays US tariffs on Etsy orders from the UK?

Since the US ended its de minimis exemption on 29 August 2025, every parcel to the US can owe import duty. Etsy requires sellers outside the US to ship US orders delivered duty paid (DDP) for them to qualify for Etsy Purchase Protection, so in practice you prepay the duty when you buy the label and build it into your prices. Etsy collects US sales tax separately.

Related guides

• Etsy VAT setup for UK sellers: adding your VAT number and configuring your shop once you’re registered
• The £1,000 trading allowance: when it covers you and when to claim expenses
• Allowable expenses for online sellers: what makers can deduct
• Selling to US customers from the UK: duties, DDP shipping and tariff codes
• Selling to EU consumers from the UK: IOSS, the €150 limit and EU VAT
• VAT threshold 2026: how the £90,000 rolling test works
• Vinted tax and eBay tax: HMRC reporting on other marketplaces