Is this calculator updated for the 2026/27 tax year?

Yes, all calculators are fully updated with the latest HMRC thresholds, personal allowances, and National Insurance rates for 2026/27.

Can I use this for official tax submissions?

These tools are for estimation and illustrative purposes only. For official tax returns, please consult a qualified accountant or reference HMRC directly.

VAT Margin Scheme Calculator UK (2026/27): Used Cars & Second-Hand Goods

VAT Margin Scheme Calculator

✓ Verified for 2026/27

Item Transaction Details

Purchase Price

Selling Price

VAT Due (16.67% of margin)

£500

at 1/6th of gross margin

Gross Margin

£3,000

selling minus purchase

Net Profit after VAT

£2,500

retained profit

Effective VAT Rate

6.25%

of selling price

Margin Scheme Breakdown

Purchase Price £5,000

Net profit margin £2,500

VAT due to HMRC £500

Selling Price £8,000

Cost 62.5%

Profit 31.25%

VAT 6.25%

ℹ️ The VAT Margin Scheme is commonly used for second-hand goods (e.g., used cars), art, antiques, and collectors' items. You pay VAT at 16.67% (1/6th) of the profit margin rather than on the full selling price.

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Verified for Accuracy (2026/27 Tax Year)

Fact-checked and audited by David Vance, CTA FCA, Chartered Tax Advisor & Accountant. Verified against official HMRC rules.

How We Calculated This

Input variables: Enter the relevant amounts, rates, or percentages in the form.
Real-time breakdown: The calculator applies HMRC rules and thresholds for the 2026/27 tax year to process the values.
Display outputs: The visual graphs, donut charts, and tables are compiled dynamically to show your net take-home and deductions.

Real-World Examples

Standard Scenario

A basic calculation applying standard UK tax bands and allowances.

Calculation runs based on standard HMRC rules.

With Pension or Deductions

Factoring in a percentage of salary sacrifice or pension contributions.

Deductions are calculated and adjusted accordingly.

Related Calculators

Frequently Asked Questions

What is the VAT Margin Scheme and how does it work?

The VAT Margin Scheme is a way of calculating VAT on qualifying second-hand goods, art, antiques, and collectors’ items. Instead of charging the standard 20% VAT on the full selling price, you pay VAT at 16.67% (one-sixth) on the difference (the margin) between what you paid for the item and what you sold it for. If you sell an item for less than you paid, no VAT is due, but you cannot use that loss to offset margins on other items.

How do I calculate VAT under the Margin Scheme?

The VAT is calculated as one-sixth (16.67%) of the gross profit margin. For example, if you buy a second-hand car for £4,000 and sell it for £5,200, your gross margin is £1,200. The VAT due to HMRC is £1,200 divided by 6, which equals £200. Your net profit is £1,000.

What items qualify for the VAT Margin Scheme?

To use the Margin Scheme, the items must be eligible second-hand goods (such as used cars, furniture, or clothes) which you bought from someone who did not charge you VAT (e.g., a private individual or a business not registered for VAT). You cannot use the Margin Scheme for new goods, or items purchased with a standard VAT invoice.