Do I pay tax on selling cakes or crafts from home? The £1,000 trading allowance, platform reporting and Self Assessment

If your total sales from all your side businesses are £1,000 or less in a tax year, you usually don't need to tell HMRC, thanks to the trading allowance. The £1,000 is sales before costs, not profit. Above £1,000 you must register for Self Assessment and pay tax on either your profit or your sales minus £1,000, whichever you choose. Selling platforms also report sellers' income to HMRC once you make 30 or more sales or more than about £1,700 a year.

The thresholds at a glance

Your yearly sales (before costs)	What you need to do
£1,000 or less	Usually nothing to tell HMRC; keep simple records (GOV.UK: tax-free allowances on property and trading income)
Over £1,000	Register for Self Assessment and file a tax return. Deduct either the £1,000 allowance or your actual costs, not both (GOV.UK: tax-free allowances on property and trading income, GOV.UK: register for Self Assessment if you're self-employed)
Over £20,000–£50,000 of self-employed and property income	Making Tax Digital: digital records and quarterly updates, from April 2026 above £50,000, April 2027 above £30,000 and April 2028 above £20,000 (GOV.UK: Making Tax Digital for Income Tax)
Over £90,000 taxable turnover in 12 months	Register for VAT (GOV.UK: when to register for VAT)

The £1,000 trading allowance, properly explained

It's £1,000 of gross income: what customers pay you, before you take off ingredients, packaging or fees.
It covers all your trading income together. Cakes plus a candle side line plus dog walking count as one total.
Over £1,000, you choose: deduct £1,000 from your sales, or deduct your actual costs. If your costs are higher than £1,000, use your costs.
If you need to register, the deadline is 5 October after the end of the tax year in which you went over (the tax year ends on 5 April). Late registration can mean a penalty (GOV.UK: register for Self Assessment if you're self-employed).

The government has announced that the level at which trading income has to go on a tax return will rise from £1,000 to £3,000 later in this parliament. That's a reporting change, not a bigger tax-free allowance, and it isn't in force yet (ICAEW: Self Assessment threshold for trading income to rise to £3,000 (March 2025)).

Selling platforms tell HMRC

Since 2024, UK digital platforms (marketplaces, apps and booking sites) have had to collect sellers' details and report what they earned to HMRC each January (GOV.UK: reporting rules for digital platforms):

they ask for your name, address, date of birth and National Insurance number (or company details)
you're not reported if you made fewer than 30 sales and €2,000 (about £1,700) or less in the calendar year
being reported doesn't by itself mean you owe tax. That still depends on the rules above (GOV.UK: selling goods or services on a digital platform)

Making things to sell is usually trading. Selling your own unwanted belongings usually isn't (GOV.UK: selling goods or services on a digital platform).

Simple records that make tax easy

Every sale: date, what, how much, and how you were paid.
Every cost: ingredients, packaging, equipment and platform fees, with receipts (a photo is fine).
A separate bank account for the business makes both much easier.

On Cravers Eats every order and what you earned from it is listed in your dashboard, and Stripe keeps a record of every payout, so the sales side of your records is mostly done for you. This guide is general information, not tax advice: HMRC's helpline or an accountant can advise on your situation.

Sell on Cravers Eats

A new local marketplace for anyone who makes and sells from home: bakers, cooks, florists, crafters and makers, opening across the UK in early 2027. Founding sellers join free now and set up before launch day. Customers order and pay by card, you keep 95%, and there are no monthly fees.

Join as a founding seller

Questions people ask

How much can I earn selling cakes from home before paying tax?

Up to £1,000 a year of sales (before costs) from all your trading together is covered by the trading allowance and usually doesn't need reporting. Above that, register for Self Assessment and pay tax on your profit, or on your sales minus £1,000.

Is the £1,000 trading allowance profit or income?

Income. It's your gross sales before any costs are taken off.

Do Etsy, Vinted and other platforms report my sales to HMRC?

Yes. UK digital platforms must report sellers' earnings to HMRC each year unless the seller made fewer than 30 sales and €2,000 (about £1,700) or less. Being reported doesn't by itself mean tax is due.

When do I need to register as self-employed?

By 5 October after the end of the tax year in which your trading income went over £1,000. The tax year runs from 6 April to 5 April.

Do I need to charge VAT on homemade food?

Only once you're VAT-registered, which is compulsory when your taxable turnover passes £90,000 in a rolling 12 months.

Sources (checked October 2026): GOV.UK: tax-free allowances on property and trading income; GOV.UK: register for Self Assessment if you're self-employed; GOV.UK: selling goods or services on a digital platform; GOV.UK: reporting rules for digital platforms; GOV.UK: Making Tax Digital for Income Tax; GOV.UK: when to register for VAT; ICAEW: Self Assessment threshold for trading income to rise to £3,000 (March 2025). Last reviewed 2026-11-05.