VAT margin scheme calculator for used car dealers
Enter what you paid for a vehicle and what you sold it for, and this tool works out the gross margin, the VAT due under the standard 20% margin scheme, and your profit after VAT, instantly.
Both figures are the price paid or charged for the vehicle itself, excluding any separate add-ons you account for outside the margin scheme.
VAT is due on the margin at the standard rate, calculated as margin x 1/6 (the same as margin x 20/120 at 20% VAT).
This is an estimate, not tax advice
This calculator assumes a standard-rate 20% VAT margin scheme sale and is for guidance only. Your actual VAT position depends on your records, any global accounting scheme you use, and other HMRC rules. Always check the official guidance and speak to your accountant. See HMRC VAT Notice 718/1 on the margin scheme for second-hand cars
The VAT margin scheme, in four steps
Under the VAT margin scheme, a VAT-registered dealer only accounts for VAT on the profit margin made on each qualifying second-hand vehicle, not on the full sale price.
Work out the margin
Sale price minus purchase price, for the vehicle only, on a vehicle-by-vehicle basis.
Check the margin is positive
If you sold at a loss or broke even, there is no VAT to pay on that vehicle under the scheme.
Apply the VAT fraction
At the standard 20% rate, VAT due is the margin multiplied by 1/6 (20/120).
Keep the right records
The margin scheme has specific record-keeping requirements, including a stock book and purchase and sale invoices for every vehicle.
Margin-scheme invoicing, handled in your DMS
Vehiso's dealer management system tracks the purchase and sale price for every vehicle, so your margin and VAT position are worked out from records you are already keeping, alongside stock, customer and order management, on every plan including Free.
See the dealer management system →- Vehicle-level purchase and sale price recorded as part of your stock records.
- Order paperwork and invoicing generated from the same stock and sale data.
- Reporting to help you and your accountant reconcile margin-scheme sales at VAT return time.
VAT margin scheme FAQs
Common questions used car dealers ask about the VAT margin scheme.
Related pages
Dealer management system
Stock, customer, order and invoicing management built for used car dealers.
Pricing
See every plan side by side, with full feature and allowance details.
VAT margin scheme for used car dealers, explained
A fuller guide to how the margin scheme works and what it means for your dealership.
Keep your margin-scheme records in one place
Try the calculator above, then start your free trial or explore the free plan, no card required.