VAT on second-hand goods
VAT Global Accounting Scheme
Global Accounting is a VAT margin scheme for low-value second-hand goods. You pool eligible sales and purchases for the VAT period and pay VAT on the difference: one-sixth of a positive margin at 20%.
Under the Global Accounting Scheme, VAT = (eligible sales − eligible purchases) ÷ 6 for the VAT period, at the 20% rate. You don’t track each item. If purchases exceed sales, there’s no VAT that period and the shortfall is carried into the next one. Items must cost £500 or less each, and some goods (vehicles, boats, caravans, horses, aircraft) are excluded.
How the calculation works
Add up the selling prices of everything eligible you sold in the period, and the purchase prices of everything eligible you bought. The difference is your VAT-inclusive margin. VAT is one-sixth of it, not 20%, because the margin already contains the VAT.
Scroll across the table to read every column.
| Amount | |
|---|---|
| Eligible sales | £9,600 |
| Less eligible purchases | £6,000 |
| Global margin | £3,600 |
| VAT due: £3,600 ÷ 6 | £600 |
| Margin after VAT | £3,000 |
Multiplying £3,600 by 20% would give £720, overpaying by £120.
Who can use it
- Goods must be second-hand goods, works of art, antiques or collectors’ items bought without VAT shown separately on the invoice (for example from private sellers or other margin-scheme dealers).
- Each item must cost £500 or less. A bulk lot over £500 is fine if the individual items are each worth £500 or less; a single £720 item is not.
- Excluded: motor vehicles and motorcycles, aircraft, boats and outboard motors, caravans and motor caravans, horses and ponies. These use the ordinary item-by-item margin scheme instead.
- New stock and goods bought on a VAT invoice are not eligible.
- Goods you import yourself are not eligible for the margin scheme or Global Accounting, unless an exception applies. HMRC’s rule: you cannot use a margin scheme when you import goods other than works of art, collectors’ items or antiques into the UK. For those excepted items you may opt in; import VAT is often at an effective 5% via the reduced-valuation method, your purchase price is the import value for VAT plus that import VAT, and you must not reclaim the import VAT as input tax.
- Motor vehicles and motorcycles are excluded from Global Accounting unless broken up and sold as scrap (with normal commercial evidence that the vehicle no longer exists).
When purchases exceed sales
A negative margin means no Global Accounting VAT for that period. It is not a refund. Add the shortfall to the next period’s purchases, once.
Scroll across the table to read every column.
| Quarter 1 | Quarter 2 | |
|---|---|---|
| Sales | £4,200 | £7,200 |
| Purchases | £5,400 | £3,000 |
| Shortfall brought forward | — | £1,200 |
| Margin | −£1,200 | £3,000 |
| VAT (÷ 6) | £0 | £500 |
Use selling prices, not marketplace payouts
Your sales figure is what the customer paid, before the marketplace takes its fees. If customers paid £9,600 and £9,120 reached your bank after a £480 fee, sales are still £9,600. The fee is a normal overhead: it doesn’t reduce sales or count as a purchase. Repairs and overheads also stay out of the scheme; reclaim any VAT on them in the normal way.
To get the sales figure from platform reports, see the marketplace payout reconciliation guide.
Where it goes on the VAT return
Scroll across the table to read every column.
| Box | Entry |
|---|---|
| Box 1 | £600 (the VAT on the margin) |
| Box 6 | £9,000 (sales £9,600 less the £600 VAT) |
| Box 7 | £6,000 (purchases actually bought, not the brought-forward shortfall) |
Margin-scheme purchases never go in Box 4. Add your other sales and purchases on top.
Records to keep
- A stock book or purchase and sales records for the scheme, kept separately from other goods.
- Purchase invoices; for private sellers, write your own purchase invoice.
- Sales invoices that do not show VAT separately.
- Adjustments for goods stolen, lost or taken for private use (deduct their purchase price), and for stock on joining or leaving the scheme.
- Each period’s calculation, including any shortfall carried forward.
Keep scheme records for six years.
Download the Global Accounting working paper (Excel .xlsx), which has these examples and a blank sheet for consecutive periods.
Dealers and resellers: car dealership accounting covers the vehicle margin scheme and stock book, and the car dealership handover checklist has worked auction-fee examples. For scheme setup and returns, see VAT accountant in Kent or accountant in Maidstone.
Imports, dealer invoices and leaving the scheme
- Sales invoices to other VAT-registered dealers must include the statement “global accounting invoice” and must not show VAT separately.
- If you sell goods outside the scheme (for example you export them), deduct their purchase value from that period’s Global Accounting purchases.
- When you stop using the scheme, add the purchase value of closing stock to that period’s sales and account for VAT on it, unless the VAT due on that stock is £1,000 or less.
- HMRC Notice 718: imports, exports and margin schemes
- HMRC: using the Global Accounting scheme
- HMRC Notice 718 (archived text): margin and Global Accounting
Common questions
Global Accounting or the standard margin scheme?
The standard scheme works item by item: VAT is one-sixth of each item’s profit, and loss-making items give no relief. Global Accounting pools everything, so losses on some items offset profits on others, and you don’t need to track individual items. It is only for items costing £500 or less, and not for vehicles.
Is the global margin the same as gross profit?
No. The margin uses purchases made in the period, not cost of sales, so it ignores stock movements, overheads and fees.
Do I need a separate calculation for each marketplace?
No. Combine all eligible sales from every channel into one calculation per VAT period. Keep the channel reports as backup.
Help with a Global Accounting reconciliation
We can prepare a working paper for review with your VAT adviser, using your source records and reconciled marketplace activity.
Opens a short enquiry form. Nothing is sent until you press Send enquiry.
Related service: VAT work, including the margin schemes