eBay Expenses UK: The 2026 Tax Deduction Checklist

You can deduct at least 7 categories of expenses against your eBay income: stock, eBay fees, postage, home office costs, equipment, vehicle mileage, and professional fees. Claiming the right ones cuts your taxable profit by thousands (HMRC HS222, 2026). Each pound you miss is profit HMRC taxes at your marginal rate, 20% to 45%.

Key terms to know first:

• Trading allowance: First £1,000 of gross income is tax-free. Above that, register as self-employed (GOV.UK)
• "Wholly and exclusively" . HMRC's rule: "the entire cost must be for your business. If a cost has a dual purpose, you can only claim the business portion" (HMRC HS222, 2026)
• Cash basis. Sole traders under £150k use this by default: record income when paid, expenses when spent

TL;DR — Best deductions at a glance

Category	Typical deduction	Key rule
Cost of goods sold	30–60% of sales	Cash basis: deduct when paid
eBay fees	10–15% of sales	6.9% to 14.9% + £0.30 or £0.40 per order
Postage & packaging	5–15% of sales	Labels, boxes, tape, courier
Home office	£312 to £2,500+	Flat rate £6/week or actual costs
Equipment	£500 to £3,000	Deduct full cost under cash basis
Vehicle mileage	£1,000 to £5,000	55p/mile first 10,000 miles
Professional fees	£500 to £2,000	Accountant, software, insurance

Cost of goods sold

Your biggest deduction. 30% to 60% of gross sales for most resellers.

What counts:

• Wholesale stock purchases
• Items bought at car boot sales, charity shops, or auctions for resale
• Raw materials if you make your own products
• Import duties and shipping costs on stock purchases

What doesn't: Items you buy for personal use, even if you resell them later.

Cash basis accounting (HMRC's default for sole traders under £150,000 turnover) lets you deduct stock when you pay for it, not when it sells. A £2,000 stock buy in March reduces this year's taxable profit by £2,000, even if you sell those items next year.

HMRC requires you to keep records for 5 years after the 31 January filing deadline (HMRC Self-employment notes SA103F, 2026). Keep receipts, bank statements, or PayPal records for every purchase.

eBay and payment processing fees

You deduct any fee eBay charges. As of February 2026, eBay UK's fee structure for business sellers is:

• Final value fee: Rates range from 6.9% to 14.9% depending on category. Most common: Books, Music, DVDs, Consumer Electronics, Mobile Phones at 9.9%; Antiques, Baby, Collectables, Toys, Sporting Goods at 10.9%; Clothes and Home & Garden at 11.9%; Crafts, Pet Supplies, Wholesale at 12.9%; Jewellery at 14.9% (eBay UK official fee table)
• Per-order fee: £0.30 (orders up to £10) or £0.40 (orders over £10)
• Regulatory operating fee: 0.35% of the total sale amount (eBay UK, Apr 2024)
• Promoted Listings Standard (business and private sellers): Percentage you set per campaign, 2% to 12%+. Private sellers can use this even though their final value fees are zero (eBay private seller fees)
• Promoted Offsite: Cost-per-click model, used on Google and other external channels. Available to business sellers (eBay Promoted Offsite)
• Store subscription fees: £27/month (Basic), £77/month (Featured), £437/month (Anchor). Shop subscriptions reduce per-listing fees and increase free listing allowances (eBay Shop fees)
• Insertion fees: Free listings included with each subscription tier. Without a shop, each additional listing costs 30p (eBay business seller fees)

For a £29.50 sale (item + postage) in the Clothes category: final value fee at 10.9% = £3.22, plus £0.40 per-order fee, plus £0.10 regulatory fee, plus 20% VAT on fees = **£4.46 total eBay takes** (FlipperHelper, Apr 2026).

Most sellers net fees off their payouts. Record them as separate expenses instead. You get a clear picture of cost per sale and a proper audit trail.

Postage, packaging, and shipping

You deduct postage costs in full. Most sellers under-claim by 10% to 20% because they do not track packaging materials separately.

What counts:

• Royal Mail, Evri, DPD, or courier postage costs
• Packaging materials (boxes, padded envelopes, polybags, tape, bubble wrap)
• Label printer paper and thermal label rolls
• Postage scales
• Parcel insurance

If you charge the buyer for postage, include that income in gross sales. The cost of sending it is a separate expense. Do not net them off.

Typical deduction: 5–15% of gross sales. For a seller doing £30,000/year in lightweight clothing items, that's roughly £1,500–£4,500.

Home office and utilities

HMRC gives you two options. Most active sellers benefit from the actual-cost method.

Option 1: Simplified flat rate, £6 per week (£312/year) No receipts required. Simple, but too low if you store stock at home.

Option 2: Actual costs — proportion of household bills Work out the business-use percentage of your home (room count or floor area) and claim that share of:

• Rent or mortgage interest (not capital repayments)
• Council tax
• Electricity, gas, water
• Broadband — "ignore private use of telephone or broadband service if it is insignificant" (HMRC HS222, 2026)
• Home insurance

If you use one room of a 5-room house exclusively for your eBay business, that's 20% of household bills. If the room doubles as a guest bedroom, reduce the percentage.

Typical deduction: £312 (flat rate) to £1,000–£2,500 (actual costs for active sellers).

Equipment, software, and technology

Revenue items (full deduction in one year):

• Printer paper, ink, labels, stationery — under £200 each

Capital items:

• Computers, laptops, monitors
• Label printers (Dymo, Zebra, Rollo)
• Cameras and lightboxes for listing photos
• Shelving and storage racking
• Barcode scanners

Under cash basis, deduct the full cost in the year of purchase (except cars). Under traditional accounting, claim capital allowances at 18% per year on a reducing balance. "If you're using cash basis, you can only claim capital allowances on cars. The cost of all other equipment and vehicles is an allowable expense" (HMRC HS222, 2026).

Software subscriptions (deductible): Accounting software (FreeAgent, Xero, QuickBooks), listing tools, photo editing tools, inventory management. You deduct the full subscription cost.

Typical deduction: £500–£3,000 (varies widely by seller stage).

Vehicle and travel expenses

The 2026/27 HMRC mileage rates changed — the rate increased from 45p to 55p per mile for the first 10,000 business miles, with 25p per mile after that (HMRC travel mileage rates, May 2026).

This covers fuel, insurance, repairs, and depreciation. No need to track individual fuel receipts.

Trips that count as business travel:

• Post Office or courier drop-off
• Buying stock from a supplier, car boot sale, or auction
• Storage unit visits
• Meeting your accountant

What doesn't count: Commuting from home to a permanent workplace. For most eBay sellers, home IS the workplace, so trips to the Post Office are business travel, not commuting (HMRC HS222, 2026).

Typical deduction: £1,000–£5,000 depending on how much you drive.

Professional and admin costs

Deductible overheads include:

• Accountant fees — £150–£600/year for a basic self-assessment
• Accounting software — FreeAgent (£0–£30/month), Xero (£14–£54/month), QuickBooks (£8–£42/month)
• TransactionMerge subscription (automates eBay → FreeAgent sync)
• Business bank account fees
• Insurance — public liability, stock insurance, parcel cover
• Trade association memberships

Not deductible: Fines or penalties (HMRC late filing penalties, parking tickets), client entertainment — even if you're taking a bulk buyer to lunch.

Typical deduction: £500–£2,000.

What you CAN'T claim

• Personal clothing — even if you only wear it when posting parcels. HMRC doesn't treat ordinary clothing as a business expense
• Commuting — home to Post Office = business travel. Home to a separate office = commuting
• Depreciation — use capital allowances instead (HMRC HS222)
• Fines and penalties — any HMRC penalty or parking fine
• Private-use portion of mixed costs — 50% personal phone = claim 50%
• Childcare — even if you list items while your child naps
• VAT — if you're VAT-registered, VAT reclaimed through your VAT return can't also be deducted as an expense

How to track everything — the system that scales

Messy records cost you deductions every tax year. You cannot claim what you cannot prove.

Minimum viable system:

1. Separate bank account for eBay
2. Spreadsheet: date, item, cost, sale price, fees, shipping, profit
3. Receipts stored digitally, labelled by month

Better: use accounting software with automated eBay sync. FreeAgent handles income, expenses, and Self Assessment. With an eBay integration, sales become invoices, fees become bills, refunds become credit notes. No February scramble to find receipts.

Transaction type	What it becomes	Why
Sale	Invoice (gross amount)	Records true turnover
eBay fee	Bill (deductible expense)	Each fee itemised
Postage	Bill (deductible expense)	Full postage cost claimed
Refund	Credit note	Reverses original income
Payout	Bank receipt	Matches against invoices minus bills

FAQ

How does the £1,000 trading allowance work for eBay sellers?

If your gross eBay income is £1,000 or less in a tax year, you don't need to register with HMRC or pay tax. Above £1,000, you must register as self-employed. You can choose between deducting the £1,000 allowance OR your actual expenses — whichever leaves lower taxable profit. Never both (GOV.UK trading allowance guidance).

Which is better — trading allowance or claiming expenses?

If your actual expenses are under £1,000, use the trading allowance. If they're over £1,000 (most active sellers hit this with stock + fees alone), deduct expenses. HMRC's HS222 helpsheet covers the calculation (HS222, 2026).

Can I claim eBay fees without a separate statement?

Yes. eBay provides monthly invoices in Seller Hub under "Performance" then "Invoices". Download and save them. TransactionMerge creates bills from these in FreeAgent automatically.

Do I need receipts for every expense?

HMRC doesn't require receipts to be submitted with your return, but you must keep them for 5 years after the filing deadline. Digital copies are fine. For items under £10, a bank or PayPal record is usually sufficient.

What records must I keep and for how long?

5 years after the 31 January filing deadline. For the 2025/26 tax year (deadline 31 January 2027), keep everything until 31 January 2032 (HMRC SA103F Notes, 2026).