On the online market place Etsy, anyone may sell their handmade or vintage goods. If you are a UK-based Etsy seller, you might be wondering whether you have to pay taxes on your income. The short answer is that you do, in fact, have to pay taxes in the UK on your Etsy income.
You must disclose your income to HM Revenue and Customs (HMRC) and pay any taxes due since, as an Etsy seller, you are regarded as self-employed. This holds true regardless of whether you sell goods part-time or full-time.
Your annual income total will determine how much tax you owe. You won’t owe any income tax if the sum of your earnings from all sources is less than the Personal Allowance, which is now £12,570 for the 2021/22 tax year. You might still be required to make National Insurance contributions, though.
If your income is higher than the Personal Allowance, you must pay income tax on the excess. Your overall earnings will determine the tax rate, with higher earners subject to greater rates of tax. On the HMRC website, you may learn more about tax rates and thresholds.
If your annual revenue exceeds the VAT threshold (currently £85,000 for the 2021/22 tax year), you can additionally be required to pay Value Added Tax (VAT). If you have a VAT registration, you must charge VAT on your purchases and file VAT returns with HMRC.
In order to properly declare your earnings to HMRC, it is crucial that you keep accurate records of your Etsy earnings and outlays during the entire year. Additionally, you might want to think about talking with a tax expert to make sure that you are accurately declaring your income and utilizing any relevant exemptions or deductions. What Does the Hobby Income Limit Mean?
The maximum amount you can make from a pastime before having to pay taxes on it is known as the hobby income limit. There is no set hobby income restriction in the UK. Instead, any income you derive from a pastime is considered a component of your yearly income and, if it exceeds the Personal Allowance, is taxed. What Taxes Are Paid on Hobbies Income?
Income from hobbies is taxed the same as other types of income. You won’t owe any income tax if your entire earnings—including any income from your hobbies—fall below the Personal Allowance. You must pay income tax on the amount above the threshold if your wages are higher than the Personal Allowance.
Before you must pay tax on your hobby income, there is no cap on the amount you can deduct for hobby expenses. You may, however, write off any costs that are directly connected to your activity, such as the price of supplies or equipment. You can also write off a part of any costs that you incur for both your pastime and other sources of income. What Is the Best Way to Launch a Facebook Business?
A excellent method to expand your audience and boost your sales is to launch a Facebook company for your craft. Create a Facebook page for your company and start uploading images of your products to get things going. Be sure to keep precise records of your sales and expenses so that you may submit your income to HMRC as a self-employed individual. You can also use Facebook’s advertising features to target particular audiences and advertise your products.