Last checked 19 October 2026
Quick answer
If you sell goods online as a business, your sales before fees count towards MTD qualifying income. MTD for Income Tax applies once qualifying income is over £50,000 (from 6 April 2026), £30,000 (from 6 April 2027) or £20,000 (from 6 April 2028), according to GOV.UK. Since 1 January 2024, marketplaces may also report sellers’ earnings to HMRC.
This is general information, not tax advice. Check GOV.UK or speak to an accountant about your situation. Why we say this.
This guide is for people who sell goods online as sole traders: through marketplaces, their own web shop or social media. It covers whether MTD for Income Tax applies, how platform reporting works and what your digital records need to show.
What changes
Digital records
Your self-employment and property income and expenses are kept in compatible software. Spreadsheets can still be used with software that links to them.
Quarterly updates
Every 3 months your software sends HMRC a summary of income and expenses for each business. It isn’t a tax return.
A tax return at the end
You still submit one tax return a year, using your software, and pay your tax bill by 31 January after the tax year ends.
Does MTD for Income Tax apply to you?
GOV.UK says you need to use MTD for Income Tax if you’re a sole trader or landlord registered for Self Assessment, you get income from self-employment or property (or both), and your qualifying income is over the threshold for the relevant tax year. Qualifying income is your total self-employment and property income before expenses (turnover), not your profit.
| Qualifying income on your tax return for | Over | You’ll need to use MTD from |
|---|---|---|
| 2024 to 2025 | £50,000 | 6 April 2026 |
| 2025 to 2026 | £30,000 | 6 April 2027 |
| 2026 to 2027 | £20,000 | 6 April 2028 |
Source: Find out if and when you need to use Making Tax Digital for Income Tax, GOV.UK.
First, the question of whether you’re trading at all. GOV.UK’s online platforms guidance says that if you’re selling personal possessions you probably don’t have to pay Income Tax on them. If you sell goods you’ve bought intending to sell for a profit, or goods you’ve made, you’re probably trading. Trading income from all sources is added together, and GOV.UK says that if it’s more than the £1,000 trading allowance for the tax year, you need to tell HMRC.
For MTD, it’s your sales that count towards the threshold, not what’s left after marketplace fees, postage and stock.
Even without a letter from HMRC, GOV.UK says it’s your responsibility to check. Its checker tool can help.
Platform reporting since 2024
New rules started on 1 January 2024. GOV.UK says digital platform operators may need to collect details about you, such as your name, address, date of birth and National Insurance number, and report your income to HMRC each year by the following January. Your details won’t be reported if you make fewer than 30 sales of goods in a calendar year and receive less than 2,000 euros (about £1,700) for those sales.
Platforms must give you a copy of what they report. GOV.UK points out that:
- the report covers the calendar year, less fees, commission or taxes the platform deducted, so you’ll need to work out your income for the tax year (6 April to 5 April)
- they don’t replace your own business records
What you’ll need to keep digitally
GOV.UK says each digital record needs the amount, the date and a category (the same categories as Self Assessment). You also keep supporting records, such as bank statements and invoices, for at least 5 years after the 31 January deadline.
Marketplace payouts are often a net figure after fees. GOV.UK says that if you only know your net income, ask what the full amount was, record it, and record the expenses separately.
Typically that covers:
- sales income from each platform or your own shop, before fees
- marketplace and payment fees, and any refunds
- stock you buy to sell on, packaging and postage
GOV.UK says each separate sole trader business needs its own digital records and quarterly updates. Whether selling on several platforms counts as one business or more depends on your circumstances, so check with HMRC or an accountant if you’re unsure.
Key dates
If your qualifying income for 2025 to 2026 is over £30,000, GOV.UK’s published update periods give these dates for your first MTD year, on standard update periods:
- 6 April 2027: MTD starts and your digital records begin
- 7 August 2027: first quarterly update (6 April to 5 July 2027)
- 7 November 2027: second quarterly update (6 April to 5 October 2027)
- 7 February 2028: third quarterly update (6 April 2027 to 5 January 2028)
- 7 May 2028: fourth quarterly update (6 April 2027 to 5 April 2028)
- 31 January 2029: tax return and tax bill for 2027 to 2028
Sources: Send quarterly updates and Submit your tax return, GOV.UK. See our MTD quarterly deadlines 2027 to 2028 page for calendar update periods, and penalty points for late updates.
Free MTD deadline calendar
Add these dates to your phone or computer calendar. No email address or sign-up needed. Download the MTD key dates calendar (.ics)
What kind of software you’ll need
HMRC doesn’t provide software. GOV.UK says yours must create digital records, send quarterly updates and submit your tax return. Some software creates records itself; bridging software connects to records you already keep, such as spreadsheets. Some products can import sales and fee data from marketplaces; check what each one supports before you choose. HMRC’s find software tool lists products that have been through its recognition process. We don’t recommend particular products.
Cash and card takings
If you also sell in person, at markets or fairs, cash and card takings go into your digital records alongside your online sales. Card readers and marketplaces often pay out after fees: GOV.UK’s digital records guidance says to record the full income and the fees separately.
Tip
Platform reports cover the calendar year. GOV.UK says you’ll need to work out your income for the tax year, 6 April to 5 April.
Questions people ask
Do I pay tax every quarter?
No. Quarterly updates are summaries of income and expenses. GOV.UK says MTD won’t change the way you pay tax or the dates payments are due.
My marketplace reported me to HMRC. Do I owe tax?
Not automatically. GOV.UK says a platform reporting your details doesn’t mean you owe tax. Whether you do depends on whether you’re trading or making a capital gain.
Next steps
- Work out your qualifying income: the £30,000 threshold explained
- How to sign up for Making Tax Digital
- MTD quarterly updates explained
- What business records to keep
- Allowable expenses for sole traders
- The VAT registration threshold explained
- How to register as self-employed with HMRC
Sources
All checked on 19 October 2026.
- Find out if and when you need to use Making Tax Digital for Income Tax (updated 26 March 2026)
- Work out your qualifying income for Making Tax Digital for Income Tax (updated 11 September 2026)
- Create digital records (updated 16 July 2026)
- Send quarterly updates (updated 16 October 2026)
- Submit your tax return (updated 16 July 2026)
- Choose the right software for Making Tax Digital for Income Tax (updated 13 July 2026)
- Find software that works with Making Tax Digital for Income Tax
- Check if you need to tell HMRC about your income from online platforms
- Selling goods or services on a digital platform (updated 22 September 2025)