VAT Margin Scheme: Second-Hand Goods Guide 2026

Short answer: the VAT margin scheme lets a VAT-registered reseller pay VAT only on the margin (the difference between what they paid for an item and what they sold it for) rather than on the full selling price. At the 20% rate, the VAT is 1/6 of the margin. It works for second-hand goods, antiques, works of art and collectors’ items that you bought without being charged VAT, for example from private sellers. You don’t need to apply, but you must keep a stock book and an invoice for every purchase and sale.

This guide is for VAT-registered resellers: Vinted, eBay and Depop power sellers, vintage clothing shops, and antiques and collectables dealers. If you haven’t registered yet, see how to register for VAT, and the Vinted tax and eBay tax guides for when selling becomes a business.

Can I use the margin scheme?

Your situation	Margin scheme?
You’re VAT-registered and resell clothes, furniture, books, electronics or collectables bought from private sellers (Vinted, car boots, house clearances, Facebook Marketplace)	Yes
You bought the item from another dealer who sold it to you under the margin scheme	Yes
The seller gave you an invoice that shows VAT separately	No, even if you didn’t reclaim the VAT
You sell new goods, or goods you’ve turned into something new (upcycling)	No
You imported the item into Great Britain from outside the UK	No, unless it’s a work of art, antique or collectors’ item
Precious metals, precious stones or investment gold	No
You’re not VAT-registered	Not needed. You don’t charge VAT at all
You use the Flat Rate Scheme	Not at the same time. You’d have to leave it first

The scheme is optional. You can use it for some items and sell others under the normal rules.

How VAT on the margin works

For each item you sell under the scheme:

Margin = selling price − purchase price
VAT = margin × 1/6 (that’s 16.67% of the margin, the VAT part of a 20% VAT-inclusive amount)
If the margin is zero or negative, the VAT is nil

Example: you buy a vintage leather jacket from a private seller for £30 and sell it for £90. The margin is £60 and the VAT is £60 × 1/6 = £10. Without the scheme, the VAT would be £90 × 1/6 = £15. On a jacket bought for £60 and sold for £90, the scheme cuts the VAT from £15 to £5.

HMRC’s own example on its margin schemes page: a work of art bought for £1,500 and sold for £2,000 has a £500 margin and £83.33 of VAT.

What goes into the selling price and purchase price

Selling price is everything you receive for the item, including delivery, packaging and insurance you charge the customer. If a courier bills the buyer directly for delivery, that isn’t part of your price.
Purchase price is what you agreed to pay the seller for the item. Don’t add anything else to it.
Repairs, cleaning, restoration, new parts and overheads can’t be added to the purchase price. Instead, you reclaim the VAT on them in the normal way, if you have a VAT invoice (eligibility).

Do margin scheme sales count towards the VAT threshold?

Yes, at their full selling price, not the margin. HMRC’s registration manual (VATREG02400) is clear on this. A reseller who sells £95,000 of clothes in 12 months with a £40,000 margin has gone over the £90,000 threshold, even though the margin is well under it. The margin scheme only helps once you’re registered.

Who can use the second-hand margin scheme

You can use the scheme if all of these apply (VATMARG02150):

You’re VAT-registered.
The goods are eligible: second-hand goods (anything that can be used again as it is or after repair), works of art, antiques over 100 years old, or collectors’ items such as stamps, coins and items of historical interest.
You weren’t charged VAT when you bought them. The purchase invoice mustn’t show VAT separately.
You don’t show VAT separately when you sell them.
You keep the records described below.

Where you can buy margin scheme stock

You weren’t charged VAT, so the item can go through the scheme, if you bought it from:

a private individual: someone selling their own things on Vinted, at a car boot or through a house clearance
an unregistered business: a smaller reseller under the VAT threshold
another VAT-registered dealer selling under the margin scheme: their invoice will say so
an insurance company or finance house selling goods it acquired from private owners, in the same condition
your own private belongings, if you’re a sole trader moving them into the business and you can show what you originally paid

If a VAT-registered business sold it to you on a normal VAT invoice, it can’t go through the scheme. Charge VAT on the full price instead, and reclaim the VAT you paid.

What can’t go through the margin scheme

Items bought on a VAT invoice, even if you never reclaimed the VAT
New goods, including new stock bought at a discount, end-of-line items or returns from a retailer
Goods you’ve made into something new. HMRC’s example is cushion covers made from second-hand fabric: you charge VAT on the full price. Cleaning, mending or adding a part to an existing item is fine, but the cost of the part can’t be added to your purchase price
Gifts you received in the course of your business
Precious metals, precious stones and investment gold
Second-hand goods you import into Great Britain from outside the UK. Only works of art, antiques and collectors’ items can be imported into the scheme (imports and exports guidance). If you buy stock from sellers abroad, those items are sold under normal VAT rules

Zero-rated goods such as children’s clothing and books can go through the scheme, but there’s no point: their VAT rate is 0%, so you charge no VAT on them anyway. Sell them as normal zero-rated sales.

Margin scheme records: stock book and invoices

The records are what make the scheme work. If HMRC can’t check your margins from your records, it charges VAT on the full selling price (margin schemes guidance). You need your normal VAT records, plus:

The stock book

One line per item, tracked from purchase to sale. A spreadsheet or inventory app is fine, as long as it holds:

When you buy	When you sell
Stock number, in sequence	Date of sale
Date of purchase	Sales invoice number
Purchase invoice number (unless you wrote the invoice yourself)	Selling price, or how you disposed of it
Purchase price	Buyer’s name
Seller’s name	Margin (selling price − purchase price)
Description of the item	VAT due (1/6 of the margin)

Purchase invoices

When you buy from a private seller or unregistered business, you write the purchase invoice yourself. It needs the date, the seller’s name and address, your name and address, the stock number, a description of the item and the total price you agreed. Don’t add other costs. A screenshot of a Vinted or eBay order with the seller’s details and the price is a good starting point, but make sure your record has every item on that list.

When you buy from another margin scheme dealer, their invoice must show the scheme wording and must not show VAT.

Sales invoices

For every margin scheme sale, the invoice you give the buyer must show:

the date and an invoice number
your name, address and VAT registration number
the buyer’s name and address
the item’s stock number and a description
the total price, without VAT shown separately
the words “margin scheme - second hand goods” (or “margin scheme - works of art” or “margin scheme - collectors’ items and antiques”)

Marketplace order confirmations usually won’t include all of this, so generate your own invoices from your order data. Keep all records for 6 years, and for older stock, until the item is sold.

Your VAT return

Box	What to include
Box 1	The VAT due on the margins of everything you sold under the scheme
Box 6	The full selling price of margin scheme sales, minus the VAT on the margin
Box 7	The full purchase price of margin scheme goods you bought in the period

You file the return through Making Tax Digital software like any other VAT return.

Global accounting: the margin scheme for high-volume sellers

Writing an invoice and a stock book line for every £8 T-shirt doesn’t work if you sell hundreds a month. Global accounting is a simplified version of the margin scheme for bulk, low-value goods.

How it works: at the end of each VAT period, add up your eligible purchases and your eligible sales. VAT is 1/6 of the difference. You don’t need to match sales to purchases item by item, and you don’t need a detailed stock book.

	Standard margin scheme	Global accounting
VAT worked out	Item by item	On period totals
Stock book	Every item	Not needed
Sales invoices	Every sale	Only to VAT-registered dealers, marked “global accounting invoice”
Loss-making items	Can’t offset against other items	Negative margin carried forward to next period
Item price limit	None	No item bought for more than £500
Excluded goods	None beyond the general rules	Cars, motorbikes, boats and outboard motors, aircraft, caravans and motorhomes, horses and ponies

Records for global accounting: keep purchase and sales summaries showing the date, invoice number (if any), description and total price, kept separately from your other records, plus your VAT workings. You need to be able to tell global accounting sales apart from other sales when you make them.

Starting and stopping: when you start, you can add the eligible stock you already hold to your first period’s purchases, valued at what you paid. When you stop, you add your remaining stock to your final period’s sales and pay VAT on it, unless the VAT due is £1,000 or less.

Bundles: if you buy a bundle for more than £500 but no single item in it is worth more than £500, you can still use global accounting.

Worked examples

Example 1: an antiques and vintage shop, item by item

Jas runs a vintage and antiques shop in York and sells on eBay too. Here are four items from one quarter:

Item	Bought from	Purchase price	Selling price	Treatment	VAT
Victorian writing slope	Private seller	£120	£260	Margin scheme: (£260 − £120) × 1/6	£23.33
1970s teak sideboard	House clearance	£400	£950	Margin scheme: (£950 − £400) × 1/6	£91.67
Art deco mirror	Private seller	£200	£180	Margin scheme: loss, so nil	£0.00
Brass lamp	VAT-registered dealer, £60 + £12 VAT	£72	£150	Not eligible: VAT on full price, £150 × 1/6	£25.00

Output VAT: £23.33 + £91.67 + £0 + £25.00 = £140.00
Input VAT: £12 on the lamp, plus £25 on £150 of restoration work on the sideboard (VAT invoice from a French polisher) = £37.00
VAT to HMRC for these items: £103.00

Without the margin scheme, Jas would pay £1,540 × 1/6 = £256.67 on the same sales, less the same £37 of input VAT: £219.67. The £20 loss on the mirror can’t be used to reduce the VAT on the sideboard. The £150 of restoration isn’t added to the sideboard’s purchase price; Jas reclaims its VAT instead.

If a business buys the sideboard: a café owner wants it for their premises and asks for a VAT invoice. On the margin scheme, Jas can’t show VAT, so the café can’t reclaim any. Jas can choose to sell it outside the scheme instead: £950 including £158.33 of VAT, shown on a normal VAT invoice. The café reclaims £158.33, and Jas pays £158.33 instead of £91.67. Jas could fairly ask the café to pay a bit more to cover the difference. Once you’ve charged VAT on the full price, you can’t move that sale back into the scheme.

Example 2: a Vinted power seller using global accounting

Megan sells pre-loved women’s clothing on Vinted and Depop from Cardiff. She buys bundles from private sellers and at car boots, and no item costs her more than £500. She uses global accounting:

Quarter	Sales	Purchases	Carried forward	Margin	VAT
Jan to Mar	£14,400	£6,000		£8,400	£1,400.00
Apr to Jun	£8,000	£9,000		−£1,000	£0.00
Jul to Sep	£15,000	£5,000	+ £1,000 from Apr to Jun	£15,000 − £6,000 = £9,000	£1,500.00

In the spring, Megan stocked up for summer and her purchases beat her sales. She pays no VAT that quarter, and the £1,000 negative margin is added to her purchases for the next quarter. She can’t carry it back or set it against anything else.

She sells to the public, so she doesn’t issue invoices for each sale. She keeps her Vinted and Depop sales exports and her purchase records as her summaries, and she reclaims the VAT on her mailers and steamer separately.

Megan’s margin is high, at more than half of her selling price. At that level, the Flat Rate Scheme at 7.5% of sales could cost her less (£1,080 in the first quarter instead of £1,400). See margin scheme or Flat Rate Scheme below.

Example 3: an export to the United States

Jas sells a 1950s camera to a collector in Texas for £300. He bought it from a private seller for £100. He posts it himself and keeps the proof of export. The sale is a zero-rated export, so he writes “nil” in the VAT column of his stock book and notes why. Without proof of export, he’d owe £33.33 on the £200 margin.

Selling on Vinted, eBay and other marketplaces

You’re responsible for the VAT. As a UK-based seller, the marketplace doesn’t account for VAT on your UK sales for you.
Your selling price includes the delivery you charge. Use what the buyer paid you for the item and its delivery, not your payout after fees.
Fees are overheads. Marketplace fees, promoted listings and postage labels aren’t part of the margin calculation. Where they carry VAT you can reclaim, claim it in the normal way.
A possible change. In June 2026, HMRC and the Treasury consulted on making marketplaces liable for VAT on UK businesses’ sales to consumers. Private individuals selling their own things would be unaffected, and the government said it was considering leaving out second-hand sales by businesses. The consultation closed on 18 August 2026, and no decision had been published when we checked. We’ll update this guide when one is.

Exports and EU sales after Brexit

Exports from Great Britain to any country outside the UK, including EU countries, can be zero-rated if you meet the conditions and keep proof of export (VAT Notice 703). Record nil VAT for the item in your stock book.
Selling through an agent or auctioneer acting in their own name usually stops you zero-rating your own sale, because you’re selling to the agent, not exporting.
The buyer’s country charges its own VAT. The EU charges import VAT on the full value of second-hand goods, not your margin. For parcels worth €150 or less sold to EU consumers, that’s usually collected through IOSS. See selling to EU consumers from the UK.
Buying stock from abroad brings it in as an import, and imported second-hand goods (other than art, antiques and collectors’ items) can’t go through the scheme.

Northern Ireland

Northern Ireland follows EU rules for goods, so its dealers have extra options and restrictions (NI and EU margin scheme guidance):

A Northern Ireland dealer can buy from EU private sellers and resell under the margin scheme. No import VAT is due on those goods.
Sales from Northern Ireland to the EU under the scheme are treated like sales within Northern Ireland: VAT is due in the UK on the margin.
Goods bought in Great Britain to sell in Northern Ireland or the EU can only use the margin scheme if they’re works of art, antiques or collectors’ items.

If you hold stock in Northern Ireland, or regularly move second-hand goods between Great Britain and Northern Ireland, get advice on your specific flows. The rules differ from Great Britain’s.

Margin scheme or Flat Rate Scheme?

You can’t use both at the same time. If you’re on the Flat Rate Scheme and start using the margin scheme, you leave the Flat Rate Scheme from the start of that VAT period, and you can’t rejoin for 12 months (VAT Notice 733, sections 6.4 and 12.2).

	Margin scheme	Flat Rate Scheme
VAT worked out on	1/6 of your margin	A flat percentage (usually 7.5% for retail) of all your sales, including VAT
VAT on overheads	Reclaimable	Not reclaimable, except capital purchases of £2,000 or more
Records	Stock book and invoices, or global accounting summaries	Simpler: your sales total and the limited cost test
Turnover limit	None	£150,000 to join, excluding VAT
Loss-making items	Nil VAT, no offset (global accounting carries forward)	You still pay the flat rate on the sale

HMRC says second-hand dealers will usually pay more on the Flat Rate Scheme. That’s true when margins are thin. But the flat rate is charged on your sales, and the margin scheme on your profit per item, so the comparison turns on your margin:

At 7.5%, the margin scheme is cheaper when your margin is under about 45% of your selling price (7.5% × 6 = 45%).
At 6.5% in your first year of VAT registration, the line is about 39%.

A designer handbag reseller buying at £300 and selling at £400 (a 25% margin) is better off on the margin scheme. A clothing reseller buying £3 bundles and selling at £15 (an 80% margin) may pay less on the Flat Rate Scheme. The Flat Rate Scheme guide works through both with real numbers.

How GoodVat helps

Resellers often cross the VAT threshold without noticing, because the threshold counts the full selling price across every platform. GoodVat:

Tracks your turnover against the £90,000 threshold across your channels. We connect to Shopify, WooCommerce, Etsy and Amazon; eBay is coming soon, and for Vinted, Depop and eBay today we work from your sales exports
Registers you for VAT with HMRC
Files your Making Tax Digital VAT returns, with VAT worked out on the full price or the margin as you’ve recorded it
Calculates the right VAT at checkout on your own store, including zero-rated items like children’s clothing

We don’t give regulated tax advice. Choosing between the margin scheme, global accounting and the Flat Rate Scheme is a decision for you or your accountant, but we’ll give you the numbers to make it.

FAQ

How does the VAT margin scheme work?

Instead of paying VAT on the full selling price, you pay VAT on your margin: the selling price minus what you paid for the item. At the 20% rate, the VAT is 1/6 of the margin. If you buy a jacket for £30 and sell it for £90, the margin is £60 and the VAT is £10, not the £15 you’d pay on the full price.

Who can use the second-hand margin scheme?

Any VAT-registered business selling second-hand goods, works of art, antiques or collectors’ items that it bought without being charged VAT. That usually means buying from private individuals, unregistered businesses or other dealers selling under the margin scheme. You don’t need to apply to HMRC, but you must keep the stock book and invoices the scheme requires.

Do I need to register for VAT to use the margin scheme?

Yes. The margin scheme is only for VAT-registered businesses. If you’re not registered, you don’t charge VAT at all. When you work out whether you’ve passed the £90,000 registration threshold, you count the full selling price of second-hand goods, not your margin.

What records do I need for the margin scheme?

A stock book that tracks each item from purchase to sale, plus a purchase invoice and a sales invoice for every item. If you buy from a private seller, you write the purchase invoice yourself. Sales invoices must not show VAT separately and must say ‘margin scheme - second hand goods’ or similar. Keep everything for 6 years.

What is global accounting for VAT?

A simpler version of the margin scheme for high-volume, low-value goods. Instead of tracking each item, you work out VAT on the difference between your total eligible purchases and total eligible sales for each VAT period. You can’t use it for any item you bought for more than £500, or for cars, motorbikes, boats, aircraft, caravans or horses.

Can I use the margin scheme if I sell an item at a loss?

Yes, but there’s no VAT to pay on that item and the loss can’t reduce the VAT on your other sales under the standard margin scheme. Under global accounting, a negative margin for a VAT period is carried forward and added to your purchases for the next period.

Can I use the margin scheme on goods I export?

If you export goods to a customer outside the UK and meet the zero-rating conditions, including proof of export, the sale is zero-rated and no UK VAT is due. You record nil VAT in your stock book. The customer’s country will usually charge its own import VAT on the full value.

Flat Rate VAT Scheme: percentages, the 16.5% rate and a reseller comparison
Vinted tax: when Vinted selling becomes a business, and HMRC reporting
eBay tax: HMRC reporting and VAT for eBay sellers
VAT threshold 2026: the £90,000 test and what counts
How to register for VAT: step by step, including choosing a scheme
Selling to EU consumers from the UK: IOSS and import VAT on parcels to the EU
Import VAT: buying stock from abroad and postponed VAT accounting