The VAT Calculator

VAT Margin Scheme Calculator — Second-Hand Goods, Art & Antiques

Calculate VAT on the margin scheme for second-hand goods, antiques, and collectibles. See how much VAT you owe and how it compares to standard VAT.

VAT rate is fixed at 20% under the UK margin scheme.

VAT on Margin
£0.00
VAT you owe
Standard VAT Would Be
£0.00
VAT on full selling price
Enter a purchase price and selling price above.
Gross margin
—
Effective VAT rate
—
Profit after VAT
— 
 
 
 
 
 
  
 
What qualifies for the margin scheme?
 
     
  •   Second-hand goods — any used item you did not manufacture or significantly alter 
    •  
  •   Works of art — original paintings, drawings, prints, sculptures, and photographs 
    •  
  •   Antiques — items over 100 years old 
    •  
  •   Collectors' items and collectibles — stamps, coins, medals, and similar 
    •  
 

The scheme only applies to items bought from a private individual or non-VAT-registered seller — you cannot use it for goods on which you (or a previous trader) reclaimed input VAT.

 
 
   
 
  
 
How to use this calculator
 
    
    
      
  1. 
        1
        Enter the price you paid for the item in the Purchase price field.
      
    2. 
      
  2. 
        2
        Enter the price you are selling it for in the Selling price field.
      
    3. 
      
  3. 
        3
        Read your VAT due on the margin, then compare it with what you would pay under standard VAT to see how much the scheme saves you.
      
    4. 
    


    
How the VAT margin scheme works


    
The VAT margin scheme lets dealers in second-hand goods, antiques, art, and collectibles pay VAT only on their profit, rather than on the full selling price. So if you buy a piece of furniture for £300 and sell it for £500, you pay VAT on the £200 difference, not on the £500 total. For businesses that regularly buy and sell used items, this can make a significant difference to the amount of VAT handed over to HMRC each quarter.


    
The scheme exists because of a fairness problem with ordinary VAT rules. When goods are brand new, VAT gets charged once at the point of sale. But second-hand goods have usually already had VAT paid on them at some point in their life. Without the margin scheme, VAT would effectively be charged twice on the same item — once when it was new and again when it changed hands as a used item. The margin scheme removes that double charge.


    
To qualify, the goods must be second-hand, and you must have bought them from someone who did not charge you VAT on the sale — typically a private individual, a charity, or another dealer who also sold the item under the margin scheme. Qualifying goods include used cars, motorcycles, works of art, antiques (items over 100 years old), collectibles, and general second-hand goods. Once you are registered and charging VAT, the Standard VAT Calculator can help you work out how much output VAT you would owe if you were using normal VAT accounting instead.

   
  
 
Formula
 
    

      
The maths behind the margin scheme is straightforward once you understand why it works the way it does. You subtract your purchase price from your selling price to get the margin, then divide by six to find the VAT due.


      
You divide by six rather than multiplying by 20% because the selling price you charge customers already includes VAT. When a price is VAT-inclusive, the VAT portion works out to one sixth of the total — not one fifth. Multiplying £200 by 20% gives you £40, which would only be right if the £200 were a VAT-exclusive figure. Dividing by six gives you £33.33, which is the correct VAT amount already embedded in a VAT-inclusive price. The same logic applies whenever you remove VAT from a gross figure — the Reverse VAT Calculator uses this same method to extract VAT from any price.


      

        

          

          

            
Margin           = Selling price − Purchase price
VAT due          = Margin ÷ 6
                   (equivalent to 20% of the VAT-inclusive margin)

Effective rate   = VAT due ÷ Selling price × 100
Profit after VAT = Margin − VAT due

          

        

      


      
Dividing by 6 extracts the VAT element from a VAT-inclusive amount at the 20% standard rate (since 20/120 = 1/6).


      
Here is the full worked example using the car dealer: purchase price £8,000, selling price £10,000, margin £10,000 − £8,000 = £2,000, VAT due £2,000 ÷ 6 = £333.33. Under standard VAT, the dealer would owe 20% of the net selling price: £10,000 ÷ 1.20 = £8,333.33 net, with VAT of £1,666.67. The margin scheme saves the dealer over £1,300 on this single transaction.


      
When the margin scheme saves you money


      
The scheme almost always saves money when you buy goods from private individuals and sell at a profit. Take an antique dealer who buys a writing desk at auction for £300 and sells it through their shop for £500. Under standard VAT, they would owe VAT on the full net selling price: £500 ÷ 1.20 = £416.67 net, with £83.33 VAT due to HMRC. Under the margin scheme, they pay VAT only on the £200 margin: £200 ÷ 6 = £33.33. That is a saving of £50 on a single item. Across a busy trading year, those savings stack up quickly.


      
The scheme may not be worth the extra administration if your margins are very tight or if you sell a high volume of low-value items. HMRC requires you to keep detailed stock records for every margin scheme item, which takes time. If the additional record-keeping costs more than the VAT saving is worth, some businesses find it simpler to account for VAT in the normal way. For most dealers in second-hand goods and antiques, however, the saving comfortably outweighs the paperwork.

    

   
  
 
Worked example
 
    

      

        
Example — used car bought for £8,000, sold for £10,000

      

      
    
        
  1. 
          1
          
    
            Gross margin (£10,000 − £8,000)
            £2,000.00
          
    
        
    2. 
        
  2. 
          2
          
    
            VAT due under margin scheme (£2,000 ÷ 6)
            £333.33
          
    
        
    3. 
        
  3. 
          3
          
    
            Standard VAT on full selling price (£10,000 ÷ 6)
            £1,666.67
          
    
        
    4. 
        
  4. 
          4
          
    
            Saving vs standard VAT (£1,666.67 − £333.33)
            £1,333.34 saved ✓
          
    
        
    5. 
      

      

        
Under standard VAT the dealer would owe £1,666.67. Under the margin scheme they owe just £333.33 — a saving of over £1,300 on a single transaction. Profit after VAT = £2,000 − £333.33 = £1,666.67.

      

    

   
  
 
Frequently asked questions
 
 
 
What is the VAT margin scheme?
 
The VAT margin scheme is a special method of calculating VAT for dealers in second-hand goods, works of art, antiques, and collectibles. Instead of paying VAT on the full selling price, you pay VAT only on the difference between what you paid for an item and what you sell it for. This avoids double taxation on goods that have already had VAT charged on them earlier in their life. The scheme is optional, and you can choose to use standard VAT accounting instead if it suits your business better.
 
 
What goods qualify for the VAT margin scheme?
 
The scheme covers second-hand goods (used items that can be re-used as they are or after repair), works of art, antiques (items over 100 years old), and collectibles such as stamps, coins, and medals. Used vehicles, motorcycles, and caravans can also qualify. Goods do not qualify if they are new, if they were bought with a VAT invoice from a VAT-registered seller, or if they fall into certain categories excluded by HMRC such as precious metals and investment gold.
 
 
Can I use the margin scheme if I buy from another VAT-registered dealer?
 
It depends on how the other dealer sold the goods to you. If they sold the item under the margin scheme themselves and did not issue a VAT invoice, you can use the scheme when you resell it. A standard VAT invoice showing VAT charged on the full price means you cannot use the margin scheme for that item — you would instead reclaim the input VAT and charge standard VAT on your selling price. Always check whether the goods come with a margin scheme purchase invoice or a standard VAT invoice.
 
 
What records do I need to keep under the margin scheme?
 
HMRC requires you to keep a stock book with a separate entry for every margin scheme item. Each entry must include a stock reference number, a description of the item, the date you bought it and the price you paid, the name and address of the person you bought it from, the date you sold it and the price you received, and the name and address of the buyer. You must also keep any purchase invoices or receipts, and hold all records for six years.
 
 
What is the global accounting scheme?
 
The global accounting scheme is a simplified version of the margin scheme for dealers who handle large volumes of low-value items, such as a second-hand bookshop or a charity shop. Rather than calculating the margin on each individual item, you total up all your purchases and all your sales for the VAT period and pay VAT on the overall difference. The VAT calculation is the same (total margin ÷ 6) but the record-keeping is simpler. You cannot use global accounting for motor vehicles, horses, ponies, or high-value items such as works of art and antiques above certain values.
 
 
Can I opt out of the margin scheme for some items?
 
Yes. The margin scheme is optional, and you can choose to use standard VAT accounting for any individual item, even if it would normally qualify. Some dealers do this when they want to reclaim input VAT on repairs or restoration costs, which is not possible under the margin scheme. You simply account for those items under normal VAT rules and use the margin scheme for the rest. You do not need to notify HMRC, but your records must clearly show which items are accounted for under which method.
 
 
Does the margin scheme apply to online sales through platforms like eBay?
 
Yes, the margin scheme applies to online sales in exactly the same way as in-person sales, provided the goods qualify and you bought them without a VAT invoice. The platform you sell through does not affect your VAT obligations as the seller. Bear in mind that eBay and similar platforms may collect VAT on certain transactions — particularly for goods sold by overseas sellers to UK buyers — but for UK-based dealers selling qualifying second-hand goods, the margin scheme works the same online as it does in a shop or at auction.
 
 
What happens if I sell a margin scheme item at a loss?
 
If you sell an item for less than you paid for it, the margin is negative and no VAT is due on that transaction. Under the individual item method, you cannot use a loss on one item to reduce the VAT owed on a profitable sale. Under the global accounting scheme, losses on some items do reduce the overall margin and therefore the VAT due for the period, which is one reason dealers with variable margins sometimes prefer it. You must still record the transaction in your stock book even when you make a loss.
 
 
 
  
    

      
Common mistakes

      
    
        
  • Applying the scheme to goods that do not qualify. The margin scheme only works for second-hand goods, art, antiques, and collectibles. You cannot use it for brand-new items, even if you bought them cheaply. If you buy new stock from a supplier and resell it, standard VAT applies. Similarly, if you buy goods and receive a VAT invoice for them, those goods do not qualify for the margin scheme because the seller has already accounted for input VAT.
    • 
        
  • Not keeping the required stock books. HMRC requires you to keep a stock book with a separate entry for every margin scheme item. Each entry must include a stock reference number, a description of the item, the date and price of purchase, the name and address of the person you bought it from, the date and price of sale, and the name and address of the buyer. You must also keep any purchase invoices or receipts. These records must be kept for six years and made available to HMRC on request.
    • 
        
  • Calculating VAT by multiplying by 20% rather than dividing by six. This is probably the most common maths error in margin scheme accounting. Using the antique example: 20% of £200 is £40, but the correct figure is £200 ÷ 6 = £33.33. The difference seems small on a single transaction, but if you use the wrong method across hundreds of sales, you will overpay VAT to HMRC with no straightforward way to reclaim it.
    • 
        
  • Using the scheme for goods bought from a VAT-registered business that issued a VAT invoice. If a VAT-registered seller gives you a proper VAT invoice for the goods, you cannot use the margin scheme. A standard VAT invoice means the seller has separately charged and accounted for VAT on the purchase. In that situation you should reclaim the input VAT in the normal way and charge output VAT on the full selling price. Using the margin scheme on those goods would be incorrect and could result in a VAT assessment from HMRC.
    • 
      

    


    

      
VAT rules and HMRC guidance

      
The VAT margin scheme is governed by HMRC VAT Notice 718, which covers all aspects of the scheme in detail — including which goods qualify, how to calculate the margin, what records to keep, and how to complete your VAT return. You can read the full notice at gov.uk/guidance/the-margin-and-global-accounting-scheme-vat-notice-718. If you use the global accounting scheme, that is also covered within VAT Notice 718, along with the rules for motor vehicles and works of art, which have some specific variations.

      
Section 10 of VAT Notice 718 sets out the stock book requirement, and it is not optional. HMRC can visit your premises to inspect your records and, if the records are incomplete or missing, can assess you for VAT on the full selling price of the affected goods rather than just the margin. The notice also covers what to do if you are unsure whether an item qualifies, and how to handle goods bought as part of a job lot where some items may qualify and others may not. For further help, the HMRC VAT helpline details are available at gov.uk/contact-hmrc.

    

   
  
 
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