Do I Have to Pay Taxes if I Sell Clothes Online?

Selling clothes online can be a fun and profitable way to earn extra income, whether you’re clearing out your wardrobe, selling handmade items, or running a full-scale business. However, one of the most important questions many online sellers ask is: “Do I have to pay taxes if I sell clothes online?”

In the UK, the answer depends on how much you are selling, whether you are running a business, and how frequently you make sales. While occasional sales from your personal wardrobe may not trigger tax obligations, selling clothes online as a business has more specific rules. This post will guide you through the tax rules surrounding online clothing sales and when you need to report your income to HMRC.

Do I Have to Pay Taxes if I Sell Clothes Online?

Whether you have to pay tax depends largely on the scale of your online sales and whether HMRC considers you to be running a business. Here’s a breakdown of when taxes are due and when you may be exempt:

Selling Clothes from Your Own Wardrobe

If you’re selling clothes that you already own (i.e., second-hand clothes) occasionally and without making a profit, you generally don’t need to pay tax. For example:

Selling a few items here and there, perhaps on platforms like eBay, Depop, or Vinted, to declutter your home.
If you’re selling at a small profit but it’s not regular or organised, HMRC typically doesn’t expect you to pay tax on this income.

However, if you start selling clothes more regularly and your sales are making a consistent profit, then HMRC may consider you to be running a business, even if it’s a small one. This means you would need to report your earnings and possibly pay tax.

The £1,000 Trading Allowance

If you are earning from selling clothes online but your total income from this activity is £1,000 or less in a tax year, you may not need to pay any tax. The trading allowance allows you to earn up to £1,000 tax-free from selling goods or providing services online, including clothes.

If your sales remain below this threshold, you don’t need to report your income to HMRC or pay tax on it.
If your income exceeds £1,000, you will need to declare it to HMRC, and you may be required to pay tax on the profit you make.

Running a Business Selling Clothes Online

If you are selling clothes online as part of a more organised business or for regular profit, you will need to pay taxes and report your income to HMRC. Even if you’re only selling part-time or from home, if you are actively running an online clothing store, HMRC may consider you self-employed and require you to pay tax. Here’s what you need to do:

Register as Self-Employed: If you’re making money from selling clothes online regularly, you need to register as self-employed with HMRC. This will allow you to file a Self Assessment tax return and pay the necessary taxes.
Keep Records of Your Sales and Expenses: If you’re running a business, you need to keep track of all income and business-related expenses, such as shipping costs, material costs, and marketing expenses. This will help you calculate your profit and ensure you pay the right amount of tax.
Submit a Self Assessment Tax Return: Each year, you must submit a Self Assessment tax return to HMRC, where you’ll report your income and expenses from your online clothing sales.

VAT Considerations

If your online clothing sales exceed the VAT registration threshold of £90,000 per year, you must register for VAT with HMRC. This would apply if you’re selling a large volume of clothes and your turnover is consistently high. Once registered for VAT, you’ll need to charge VAT on your sales and file regular VAT returns.

However, most small online sellers will not hit this threshold and won’t need to worry about VAT. If you’re just starting out or your sales are relatively low, VAT likely won’t apply to you.

How Do You Report and Pay Tax?

If you need to pay tax on your online clothing sales, here’s how the process works:

Register for Self-Assessment: If you are earning money from your online clothing business, you must register with HMRC for Self-Assessment by 5 October after the end of the tax year in which you started your business.
Keep Accurate Records: Keep detailed records of your sales, including receipts and any business expenses (such as shipping, materials, or fees for online platforms). This will help you calculate your taxable income and claim any allowable expenses.
Submit Your Tax Return: Once registered, you’ll need to submit a Self Assessment tax return every year. The deadline for submitting your return is 31 January each year, and this is when you’ll also need to pay any tax owed.
Paying Income Tax: After submitting your Self Assessment, HMRC will calculate how much tax you owe. You’ll pay income tax on your profits (sales minus expenses), and the tax will depend on how much you earn. The UK income tax rates for the 2025/26 tax year are:
- 20% for earnings between £12,571 and £50,270.
- 40% for earnings between £50,271 and £150,000.
- 45% for earnings over £150,000.
National Insurance Contributions (NICs): As a self-employed seller, you may also need to pay National Insurance contributions. This is based on your profits and could be either Class 2 or Class 4 NICs, depending on your earnings.

So, do I have to pay taxes if I sell clothes online?

In the UK, you don’t have to pay tax if you’re selling clothes online as a one-off or for a hobby, especially if your earnings are under the £1,000 Trading Allowance. However, if you are selling clothes online regularly, for profit, or as a business, you’ll need to report your earnings and may have to pay tax.

Be sure to keep accurate records, stay within the Trading Allowance if you’re selling casually, and remember that if your online clothing sales turn into a business, you must register as self-employed with HMRC and submit a Self Assessment tax return.

If you’re unsure about your tax obligations or need help with reporting your income, consulting with a tax professional or accountant can help ensure you stay compliant and avoid any penalties.

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