VAT is determined by your Sales and Purchase/ Expenses. If we use the correct scheme, we may save some GBP.

Many schemes are helpful to various people depending on

  • their nature of the business,
  • the type of rates, and
  • when the payment is made There are different VAT Schemes. 

Picking the suitable VAT Scheme, the business may

  • Pay minimum legal VAT Amount
  • Improve cash flow However, it is not always a choice. Vat schemes have threshold too to be eligible to utilize the same. 

Most businesses need to use the four Schemes namely FRS, POS, Direct Calculation, and Apportionment to submit their VAT Return. VAT Margin Scheme: This scheme is for second-hand dealers. Instead of taxing the full selling price, it taxes the difference between what you paid for an item and what you sold it for.



They do not have anything to reclaim on those purchases they resale and so they need to pay VAT on only the margin i.e the difference between the price at which you sell an item and the price you paid. Apart from the sellers of second-hand goods, the VAT Margin Scheme is also used by sellers of antiques, works of art, and other collectors’ items. These businesses do not pay VAT on the full selling price but only on the margin as they do not reclaim VAT on the purchase of these items (and not when you were charged VAT on).

You pay VAT at 16.67% (one-sixth) on the difference. For E.g. if you buy an antique piece for £1,800 and sell it for £2,100. Using a margin scheme, you pay VAT at 16.67% (one-sixth) on the difference: £300. This means you’ll pay £50. For items that do not qualify for the margin scheme, your account in a normal way.

You can start using this scheme at any time. All you need to do is to keep the records. You have to keep records for six years or even more if still in stock.

You must keep the invoice from the seller when you bought the item and a copy of the invoice you gave to the buyer when you sold the item. The invoice must include, date, name and address, the item’s unique stock book number, invoice number, item description, total price without adding any other costs to this price, and any of the supporting: ‘margin scheme second-hand goods’, ‘margin scheme - works of art’ or ‘margin scheme - collectors’ items and antiques’ Selling You need to do keep detailed records including invoices for all items and a stock book and then report them on your VAT return.

Outsourcing VAT services can save you from any trouble and you can give your vat preparation to experts who are experienced in using different vat schemes.