Quick answer
Work out VAT due under the Tour Operators Margin Scheme for 2026/27 on the margin between what you charge customers and what you pay suppliers for travel services. It uses the rates and thresholds HMRC has published for 2026/27 (VAT under TOMS is calculated on the margin (selling price less cost of margin scheme supplies) using the VAT fraction of 1/6, equivalent to the 20% standard rate applied to a VAT-inclusive margin). Worked example: with total selling price to customers £50,000, cost of margin scheme supplies (accommodation, transport etc.) £35,000, proportion of the margin relating to travel enjoyed in the uk 100 %, the result is vat due under toms £2,500 and gross tour operating margin £15,000. Free to use, no sign-up, from LimitedCompany.Accountants (ICAEW-regulated ACCOTAX).
If you buy in and resell travel, accommodation or similar services as principal, TOMS changes how VAT is calculated. This calculator applies the margin scheme rules to your selling price and cost of supplies for 2026/27 to show the VAT due.
The tour operators margin scheme (toms) calculator runs on the rates and thresholds HMRC has published for the 2026/27 tax year, so the figures you see reflect the position your company is actually filing on rather than a historic set of bands. Change any input and the result recalculates immediately, with no sign-up and nothing sent anywhere.
If you are a director of a UK limited company, use it as a first look before a decision rather than as the decision itself. VAT under TOMS is calculated on the margin (selling price less cost of margin scheme supplies) using the VAT fraction of 1/6, equivalent to the 20% standard rate applied to a VAT-inclusive margin. Real company positions bring in other income, reliefs, group structures and prior year adjustments that a single page of inputs cannot see, which is why the workings are written out below under vat. Read those, then check the numbers against your own accounts, and speak to us if anything looks materially different from what you expected.
Last checked against HMRC rates: 12 September 2026 (2026/27 tax year). Reviewed by Waqas Sagar, Member of ICAEW, Fellow of ACCA, Fellow of AAT.
Result, 2026/27
VAT due under TOMS
Gross tour operating margin
Taxable margin (UK-enjoyed travel)
Margin retained after VAT
Illustration only, figures are based on the rates you have selected and the information entered. Please check your own position with us before acting.
Estimates for the 2026/27 tax year using published GOV.UK rates. Switch between 2026/27 and 2025/26 above.
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Book a free general call WhatsApp usBook technical advice (paid)TOMS applies where a business buys in and resells, as principal, travel-related services such as accommodation, passenger transport or other margin scheme supplies used for the direct benefit of a traveller, without material alteration. Instead of accounting for VAT on the full selling price, VAT is only due on the margin, the difference between what you charge the customer and what you pay your suppliers.
The margin is treated as VAT-inclusive, so the VAT fraction of one-sixth is applied to it, which is mathematically equivalent to charging 20% VAT on the underlying VAT-exclusive margin. No VAT is charged separately to the customer under TOMS; it is absorbed within your margin.
Only the portion of the margin relating to enjoyment of travel and services within the UK is taxable under UK VAT; the proportion relating to enjoyment outside the UK is generally outside the scope of UK VAT, which is why the calculator lets you apply a UK proportion to the overall margin.
TOMS is mandatory, not optional, for any UK-established business acting as principal or undisclosed agent in buying in and reselling qualifying travel supplies, including tour operators, travel agents acting as principal, and businesses that package accommodation with other services such as event organisers or wedding planners abroad.
It does not apply if you are acting purely as a disclosed agent, arranging the supply on behalf of the customer and merely earning commission, which is subject to normal VAT rules instead.
Businesses can use provisional calculations during the year based on estimated margins, with an annual adjustment calculated after the year end once actual costs and selling prices are known, correcting any under- or over-declared VAT.
TOMS calculations require detailed records distinguishing margin scheme supplies from other income, and businesses with material EU or non-EU travel need to apportion margins carefully by destination to apply the correct VAT treatment.
Treat the result as a planning figure for the 2026/27 tax year. If it changes what you were about to do, take a director's salary, a dividend, a large asset purchase or a filing decision, check it against your own accounts first. We can review the position with you and confirm the tax treatment before you commit.
No, TOMS is mandatory for qualifying supplies bought in and resold as principal for the direct benefit of a traveller; you cannot elect to use normal VAT accounting instead for those specific supplies.
No, input VAT on margin scheme purchases is not separately recoverable; it is effectively factored into your margin calculation. You can, however, reclaim VAT on general business overheads that fall outside TOMS in the normal way.
You need to apportion your margin between the UK-enjoyed and overseas-enjoyed elements on a fair and reasonable basis, since only the UK-enjoyed proportion is subject to UK VAT under TOMS.
No, TOMS VAT is calculated on your margin, not shown as a separate VAT charge on the customer invoice, so your invoices to customers under TOMS should not show a VAT amount in the normal way.
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