How VAT on the margin is worked out
Under the VAT margin scheme you pay VAT only on your profit margin, not the full selling price. The margin is the selling price minus the purchase price, and the VAT due is one sixth (16.67%) of that margin.
| You buy a used car for | £3,000 |
| You sell it for | £4,500 |
| Margin (sale − purchase) | £1,500 |
| VAT due (margin ÷ 6) | £250 |
If you sell an item for less than you paid, the margin is zero or negative and no VAT is due — but the item still needs a stock book entry, and that loss cannot reduce the VAT owed on your profitable items. The calculator handles this for you automatically.
The stock book HMRC expects
HMRC requires margin scheme users to keep a stock book recording every item bought and sold under the scheme. It must be complete, accurate and able to reconcile with your invoices, and you must keep it for six years. For each item your records should show:
- A stock number and description of the item
- The purchase date and purchase price
- The seller's name and address
- The sale date and sale price
- The margin and the VAT due on it
If your records are inadequate, HMRC has the power to charge VAT on the full selling price instead of the margin — which is exactly what the scheme is meant to avoid. The calculator builds this record as you enter sales, and exports it as a CSV (free) or a print-ready PDF stock book.
Who this is for
Any VAT-registered UK business selling eligible second-hand goods on the margin scheme: used car dealers, antiques and collectables dealers, second-hand furniture and electronics resellers, and high-volume online sellers who have crossed the VAT threshold. It covers the standard margin scheme — not the Global Accounting Scheme variant for high-volume low-value lots.
Common questions
What is the VAT fraction for the margin scheme?
One sixth, written as 1/6 or 16.67%. You multiply the margin by this fraction. A £600 margin gives £100 of VAT. This is because the margin is treated as VAT-inclusive, not as a figure you add 20% on top of.
Which VAT return boxes does margin scheme VAT go in?
The VAT due on your margins goes into Box 1. The full selling prices feed into Boxes 6 and the related purchase figures into Box 7, calculated differently from standard VAT. Check how your figures map before filing your first return under the scheme.
Can I show VAT separately on a margin scheme invoice?
No. A margin scheme sales invoice must not show a separate VAT figure, and should carry the required statement such as "Margin scheme — second-hand goods". Showing VAT separately can invalidate the scheme for that sale.
Is my data sent anywhere?
No. The calculator runs entirely in your browser and your figures are stored only on your own device. There is no account and no server holding your numbers. Export a CSV at any time as your backup.