PayPal · gross vs net

Is my PayPal payout my turnover for MTD?

Last updated 28 October 2026. Every fact below is checked against the sources listed at the end. General information, not tax advice.

Short answer: No. Your PayPal payout is a net figure, after PayPal fees (the Fee column) have been taken off. Your turnover is the gross amount before expenses. HMRC says turnover for the threshold includes gross income from self-employment and property before any tax allowances or expenses are deducted. Record sales as income and the fees as expenses, separately.

Why PayPal payouts are lower than turnover

Each row has a Gross amount (including fees), a Fee amount and a Net amount (typically gross minus fees).

Qualifying income is your total turnover from self-employment and property: the amount before expenses, taken from the tax return you submitted for the previous tax year. It can come from more than one source.

What goes where in your records

  • Income: item sales plus postage charged to buyers, less refunds.
  • Expenses: PayPal fees (the Fee column).
  • Neither: the payout to your bank. It's a transfer of money you've already recorded.

A digital record needs the amount, the date the income was received or the expense occurred, and its category (the same categories as Self Assessment). If turnover from a self-employment is under £90,000, you can choose simpler categorisation: a sole trader only needs to record whether each transaction is income or an expense.

Worked example: one quarter on PayPal

Example figures Update 1 of 2027 to 2028 (6 April to 5 July 2027). Made-up figures for a fictional seller, not real data.

LineAmount
Sales (item prices)£3,210.00
Refunds−£60.00
Turnover (income)£3,150.00
PayPal fees (expenses)−£113.85
Paid out to your bank£3,036.15

Turnover is £3,150.00, not the £3,036.15 that reached the bank. The £113.85 of fees is recorded as an expense.

Turn your PayPal exports into MTD-ready records

TidyTill reads Etsy, eBay, Amazon, Shopify and PayPal exports, works out gross turnover, splits it into MTD periods and flags gaps and duplicates. Upload your exports and see your totals, quarters and Health Check free before you pay. Then £19 one-off for a workbook or £49 a year for unlimited workbooks. Paid workbook downloads open very soon; the free preview works now.

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Questions

Do fees reduce the figure HMRC uses for the MTD threshold?

No. Qualifying income is your total turnover from self-employment and property: the amount before expenses, taken from the tax return you submitted for the previous tax year. It can come from more than one source.

Can I just record my bank deposits?

Deposits mix sales, refunds and fees together. A digital record needs the amount, the date the income was received or the expense occurred, and its category (the same categories as Self Assessment).

Can I claim the trading allowance instead of fees?

The trading allowance is a tax exemption of up to £1,000 a year. If your gross trading income is more than £1,000 you can deduct the £1,000 allowance instead of your actual expenses. See the trading allowance and MTD.

Sources

TidyTill is a record-keeping aid only. This page is general information, not tax advice. TidyTill is not HMRC-recognised software and it doesn't submit anything to HMRC: you send quarterly updates and your tax return through HMRC-recognised software. Rules and dates can change, so check GOV.UK or ask an accountant about your own situation.

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