What Is Making Tax Digital?
Making Tax Digital (MTD) is a long-term plan put in place by the government to modernise the tax system.
It means that, eventually, all businesses, sole traders and landlords will need to keep digital records via MTD compatible and HMRC-approved software, submitting their figures every quarter.
VAT-registered businesses will already be keeping and reporting their digital records; this is called MTD for VAT.
The newest rules, MTD for ITSA, came into force in April 2026 and will help to bring the tax system closer to real time by having individuals submit their figures quarterly.
Does Making Tax Digital Apply to eBay Traders?
Yes, it does, but only if you are trading and earning over the threshold.
If you’re just selling personal items, like old clothes and unwanted household items, it is unlikely you would be classed as trading.
You would be seen as trading if you were regularly buying and reselling for profit and running an organised online shop.
Online Seller Reporting Rules
It’s especially important to be aware of your tax obligations since the introduction of the ‘side hustle’ tax rules in 2025.
This caused some confusion at the time of its announcement, with many individuals who were selling items via online sites, such as eBay, Vinted or Etsy, concerned that there was a new tax to pay.
However, it just means that the digital platforms have now started collecting information about the people who make money through their sites and sending it on to HMRC.
This creates more HMRC visibility, identifying the individuals who are earning over £1,000 in sales or completing over 30 transactions annually, and looking at whether or not they should be paying tax if they’re not already.
Making Tax Digital Thresholds for eBay Sellers
If you are an eBay seller who needs to file a self assessment tax return, then MTD for ITSA will apply to you, but the year this becomes mandatory will depend on your earnings.
So, as a sole trader, you will be affected from:
- 6th April 2026, if you have an annual business income of more than £50,000
- April 2027, if you have an annual business income of more than £30,000
- April 2028, if you have an annual business income of more than £20,000
What Are My Making Tax Digital Responsibilities as an eBay Seller?
- Keep digital records of your income and expenses using HMRC-compatible software. Make sure to include things like eBay fees, postage costs and packing, as well as refunds and returns.
- Submit quarterly updates to HMRC on: 7th August, 7th November, 7th February and 7th May. These are almost like progress snapshots of your records that will give you an estimated tax bill as you go. They do not trigger payments and can be corrected later if needed.
- Complete a final end-of-year declaration – you’ll do this after your fourth quarterly update. This replaces the traditional self assessment return and is where everything is checked, corrected and finalised.
The deadline date for a return, or end-of-year declaration, remains the same and is still due by the 31st of January following the end of the tax year.
How We Can Help You With Making Tax Digital
At Dolan Accountancy, we can support you through every step of MTD, helping with tasks such as:
- Setting up compliant digital bookkeeping through FreeAgent
- Managing your quarterly submissions
- Keeping your records accurate and up to date
- Ensuring you stay fully compliant and stress-free
Our MTD package includes everything you need and is just £25 +VAT per month.
If you’re an existing client, we charge an additional £10 + VAT per month to take care of your MTD needs.
If you have any further questions, our team of experts are available to answer any queries, so give us a call on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com. Alternatively, contact us via live chat.
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