**Take Home** VAT · 2025/26 # The VAT margin scheme: paying VAT on the margin, not the price The VAT margin scheme lets you pay VAT on the difference between what you paid for an item and what you sell it for, not on the full selling price. The VAT due is one sixth of that margin. It exists for second-hand goods, art, antiques and collectibles, where you usually cannot reclaim VAT on the purchase, and it can save a dealer a great deal. CB [Charlie Bailey](https://www.linkedin.com/in/charliebaileyy/) · Founder, Take Home · 6 years in UK accountancy Published 2026-05-30 · Updated 2026-05-30 · 3-min read On this page - [Work out the VAT](#calc) - [What the scheme is](#what) - [What's eligible](#eligible) - [The records you must keep](#records) - [The Global Accounting Scheme](#global) - [FAQ](#faq) ## Key takeaways - You pay VAT on your margin (sale price minus purchase price), not the full sale price. - The VAT due is one sixth of the margin (20% of the VAT-inclusive margin). - It covers eligible second-hand goods, art, antiques and collectibles . - You cannot reclaim VAT on items you buy under the scheme, and you cannot show VAT separately on invoices. - If you make a loss on an item, there is no VAT to pay on it. ## Work out the VAT Calculator: VAT under the margin scheme What you paid for the item (£) What you sell it for (£) Under the VAT margin scheme you pay VAT on the margin, not the full sale price. The VAT is one sixth of the margin (20% of the VAT-inclusive margin). You cannot reclaim VAT on the purchase. Eligible second-hand goods, art, antiques and collectibles only. Informational. ## What the scheme is Normally a VAT-registered business charges 20% VAT on the full price of what it sells, and reclaims VAT on what it buys. That breaks down for dealers in second-hand goods, who often buy from private individuals or unregistered sellers and so have no VAT to reclaim. Charging 20% on the full resale price would tax value that was never created by the dealer. The margin scheme fixes this. You pay VAT only on your margin, the difference between purchase and sale price, at one sixth of that margin. On a £4,000 buy and a £5,000 sale, the margin is £1,000 and the VAT is about £167, instead of roughly £833 on the full price. ## What's eligible The scheme is for: - Second-hand goods in a usable state - Works of art - Antiques and collectors' items It does not apply to anything you bought and reclaimed VAT on, to investment gold, or to precious metals and gemstones. Cars have their own version of the scheme with extra rules. ## The records you must keep The margin scheme is optional, but if you use it the record-keeping is strict, because the margin is what is being taxed: - A stock book tracking each item's purchase and sale - Purchase and sales invoices that meet the scheme's specific requirements - Invoices that do not show VAT separately (your buyer cannot reclaim it) If you cannot evidence the purchase price of an item, you cannot use the scheme for it, and you would have to account for VAT on the full selling price. ## The Global Accounting Scheme For dealers in high volumes of low-value items, tracking every single item is impractical. The **Global Accounting Scheme** is a simplified version: you work out VAT on the total margin across all eligible purchases and sales in a period, rather than item by item. It suits, say, a bric-a-brac or used-book seller, but it cannot be used for higher-value goods above a set limit. Nothing missed ## Never miss a threshold or a deadline. Take Home tracks your VAT position, your filing deadlines and your tax bill across the whole year, in one view. [Join the waitlist →](/contact) ## Related guides [Guide ### UK VAT threshold 2026: when do you have to register? The UK VAT registration threshold is £90,000 of taxable turnover, measured on a rolling 12-month basis. 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How much VAT do I pay under the margin scheme? One sixth of the margin. For example, buy at £4,000 and sell at £5,000 and the margin is £1,000, so the VAT is about £167, compared with roughly £833 if you charged 20% on the full price. What can I sell under the VAT margin scheme? Eligible second-hand goods, works of art, antiques and collectors' items. It does not cover anything you reclaimed VAT on when buying, investment gold, or precious metals and stones. Cars have their own version with extra rules. Can I reclaim VAT on goods I buy for the margin scheme? No. You cannot reclaim VAT on items you buy to sell under the margin scheme, and you cannot show VAT separately on your sales invoices, so your buyer cannot reclaim it either. That trade-off is the point of the scheme. What is the Global Accounting Scheme? It is a simplified version of the margin scheme for dealers in high volumes of low-value goods. Instead of tracking each item, you calculate VAT on the total margin across all eligible purchases and sales in a period. It cannot be used for higher-value items above a set limit.