Tax deductions for online sellers & resellers in the UK
If you sell online you can generally claim the cost of your stock, platform and payment fees, packaging and postage — and the point where a hobby becomes a business is what decides whether you declare the income at all. In the UK you report it through a Self Assessment tax return.
Ecommerce and reselling — Etsy, eBay, Depop, Shopify, print-on-demand and market stalls — is the second-largest digital side hustle, and the costs of getting an order out the door are generally claimable where they meet the three rules below: platform and payment fees, packaging, postage and the space you pack in. Because fees come out before the money reaches you, capturing the gross sale and the fee separately is what makes sure you claim the full amount.
The three rules for any claim
- You paid for it yourself and weren’t reimbursed.
- It directly relates to earning your income.
- You have a record — a receipt, invoice or bank statement.
Where you stand in the UK
The Personal Allowance is £12,570 before income tax applies. There is also a £1,000 trading allowance — if your gross self-employed income is under it you generally have nothing to report, and if you use the allowance you claim it instead of your actual expenses, not as well as.
- VAT rate
- 20%
- Registration
- GBP 90,000 turnover/yr
- Returns
- Quarterly (Making Tax Digital)
- Authority
- HM Revenue & Customs
What you can usually claim
These are the costs of doing the work — the same list wherever you are based. How each one is claimed follows the rules in the UK, set out below.
Cost of stock and materials
What you pay for the goods you sell, or the raw materials you make them from, including import duties and freight to get stock to you.
Platform, listing and payment fees
Selling fees, listing fees, transaction and payment-processor fees, and store subscriptions. These are deducted before you see the money, so they are easy to miss without a record.
Packaging and postage
Boxes, mailers, labels, tape and protective materials, plus postage and courier costs you pay to get orders to customers.
Home storage and workspace running costs
The running costs of the area you use to store stock or pack orders can generally be apportioned to the business use.
Advertising and photography
Paid promotion, product photography, and tools you use to list and market products.
How the UK treats them
Vehicle and travel
Simplified expenses let you claim a flat rate per business mile instead of actual running costs — 55p per mile for the first 10,000 miles and 25p after that, following the increase that took effect from 6 April 2026. Once you use the flat rate for a vehicle you must keep using it for that vehicle.
Home workspace
You can use HMRC simplified expenses — a monthly flat rate based on the hours you work from home — or apportion actual costs. The flat rate is simpler; actual costs can be worth more if you work from home most of the week.
Equipment and higher-cost gear
Equipment is usually claimed through capital allowances, and the Annual Investment Allowance often lets you claim the full cost in the year of purchase.
This is general information, not personal tax advice — what you can claim depends on your circumstances, so check with HMRC or a registered tax adviser, and keep records to back up every claim. Official guidance from HM Revenue & Customs →
Keep in mind
- Items you bought for yourself and later happened to sell.
- The private share of your home running costs.
- Making Tax Digital for Income Tax is arriving in phases from April 2026 for sole traders above the qualifying income threshold, which means quarterly digital updates rather than one annual return.
Online sellers & resellers in the UK — common questions
What can online sellers & resellers claim in the UK?
The spending travels even though the rules do not: cost of stock and materials, platform, listing and payment fees, packaging and postage, home storage and workspace running costs and advertising and photography. What changes is how you claim it — in the UK, equipment is usually claimed through capital allowances, and the Annual Investment Allowance often lets you claim the full cost in the year of purchase. This is general information, not personal tax advice — what you can claim depends on your circumstances, so check with HMRC or a registered tax adviser, and keep records to back up every claim.
How do online sellers & resellers in the UK report self-employed income?
You report it through a Self Assessment tax return. The Personal Allowance is £12,570 before income tax applies. There is also a £1,000 trading allowance — if your gross self-employed income is under it you generally have nothing to report, and if you use the allowance you claim it instead of your actual expenses, not as well as. This is general information, not personal tax advice — what you can claim depends on your circumstances, so check with HMRC or a registered tax adviser, and keep records to back up every claim.
Can online sellers & resellers in the UK claim a home workspace?
You can use HMRC simplified expenses — a monthly flat rate based on the hours you work from home — or apportion actual costs. The flat rate is simpler; actual costs can be worth more if you work from home most of the week. This is general information, not personal tax advice — what you can claim depends on your circumstances, so check with HMRC or a registered tax adviser, and keep records to back up every claim.
Do online sellers & resellers in the UK need to register for VAT?
VAT in the United Kingdom — rate: 20%; registration: GBP 90,000 turnover/yr; returns: Quarterly (Making Tax Digital). Whether you have to register turns on your own turnover and where your customers are, so check the current position with HM Revenue & Customs before assuming you are under it. This is general information, not personal tax advice — what you can claim depends on your circumstances, so check with HMRC or a registered tax adviser, and keep records to back up every claim.
More on self-employed tax in the UK — the UK hub.
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