Selling second-hand goods, used cars, antiques or art? The margin scheme charges VAT only on your profit, not the full sale price. Enter your buy and sell prices to see the VAT due.
Buy price · sell price · 2026/27
The VAT margin scheme lets you pay VAT on the profit margin of certain goods, rather than on the full selling price. It's designed for items where you couldn't reclaim VAT when you bought them — typically second-hand goods, used cars, antiques, works of art and collectors' items. The VAT due is one sixth (the 20% VAT fraction) of the gross margin.
| Buy price | Sell price | VAT due (1/6 margin) |
|---|---|---|
| £6,000 | £8,000 | £333.33 |
| £10,000 | £12,400 | £400.00 |
| £500 | £800 | £50.00 |
| £3,000 | £2,800 | £0 (loss) |
To use the scheme you must keep a stock book recording the purchase and sale of each item, and you can't issue a VAT invoice that shows VAT separately. Sell at a loss and there's no VAT to pay, but you also can't reclaim VAT on the shortfall. New goods, or items you reclaimed VAT on, can't go through the scheme.
Because VAT only applies to your profit, the scheme dramatically cuts VAT on high-value second-hand items — a used car dealer buying at £6,000 and selling at £8,000 pays £333 of VAT instead of £1,333 on the full price. Check whether you even need to register first with the VAT registration threshold calculator.
VAT is 1/6 of your gross margin (sale price minus purchase price). On a £2,000 margin the VAT is £333.33. Sell at a loss and no VAT is due.
Second-hand goods, used cars, antiques, works of art and collectors' items — generally items you bought without reclaiming VAT.
No — there's no VAT on a nil or negative margin, but you can't reclaim VAT on the loss either.
No — you can't show VAT separately on margin-scheme invoices, and you must keep a stock book for every item.
