VAT margin scheme calculator, 2026/27

How this is calculated

The margin scheme lets a VAT-registered dealer in eligible second-hand goods, works of art, antiques or collectors' items account for VAT only on the difference between what they paid for an item and what they sold it for, rather than on the full selling price, avoiding double taxation on goods that have already borne VAT (or no VAT at all) when originally purchased new.

The margin is treated as VAT-inclusive, so the standard VAT fraction of one-sixth is applied to it to find the VAT due, equivalent to a 20% rate applied to the VAT-exclusive margin.

If an item is sold for less than it was bought for, there is no VAT to pay on that item, but under the standard, item-by-item margin scheme method, that loss cannot be used to reduce VAT due on profitable items; a global accounting scheme exists for certain lower-value goods that pools margins together instead.

Which goods qualify for the margin scheme

Eligible goods are broadly second-hand goods, antiques, works of art and collectors' items that you bought without VAT being charged to you, typically because the seller was not VAT registered, was themselves using the margin scheme, or the goods otherwise qualify. New goods, and goods on which you were charged and reclaimed VAT in full, cannot use the scheme for that transaction.

Common users include car dealers selling used vehicles, antique and art dealers, and second-hand goods retailers, each of whom would otherwise face VAT on their full turnover rather than their trading margin.

Records you must keep

HMRC requires a detailed stock book recording the purchase details, purchase price, sale details and sale price of each margin scheme item (or global totals under global accounting), since margin scheme VAT cannot be verified without this evidence in an inspection.

Invoices to customers under the margin scheme must not show a separate VAT amount, and should include a reference confirming the sale was made under the margin scheme.

How is VAT calculated under the margin scheme?

VAT is due on the margin, the difference between your purchase price and selling price, not on the full selling price. The margin is treated as VAT-inclusive, so the VAT fraction of one-sixth is applied to find the VAT due.

What if I sell an item for less than I paid for it?

No VAT is due on that individual sale under the standard margin scheme method, but the loss cannot be set against VAT due on other profitable margin scheme sales unless you are using the global accounting method for eligible lower-value goods.

Can I use the margin scheme for any second-hand item?

Only for goods that qualify, broadly second-hand goods, antiques, art and collectors' items bought without VAT being charged to you. New goods, or goods on which you already reclaimed VAT, do not qualify for margin scheme treatment.

Do I show VAT separately on margin scheme invoices?

No, invoices for margin scheme sales must not show VAT separately; the VAT is accounted for internally based on your margin, and the invoice should instead reference that the sale was made under the applicable margin scheme.