What counts as an antique under the VAT Margin Scheme?
HMRC defines antiques for Margin Scheme purposes as items that are more than 100 years old. This includes furniture, ceramics, silverware, paintings, sculptures, and a wide range of collectibles. Items that are simply "vintage" or "retro" but less than 100 years old do not automatically qualify as antiques — though they may still be eligible under the second-hand goods rules if they were acquired without VAT.
The broader category of eligible goods includes works of art, collectors' items, and second-hand goods — so even items under 100 years old can qualify for the Margin Scheme provided they were purchased from a private individual or a business that did not charge VAT on the sale.
What types of antique dealers can use the scheme?
The scheme is open to any VAT-registered business that buys and resells eligible goods. This covers antique shops, auction house buyers, market traders, online dealers on platforms like eBay and Vinterior, and dealers who trade at fairs. You do not need to operate from a fixed premises to qualify.
The key requirement is that the item must have been purchased without VAT being charged to you. Purchases from private individuals, unregistered dealers, or other margin scheme dealers all qualify. Purchases from a VAT-registered business that issued a full VAT invoice do not.
How VAT is calculated on antiques
Rather than paying VAT on the full selling price, you calculate VAT on your profit margin only. The formula is straightforward: selling price minus buying price equals your margin, and you pay one sixth of that margin as VAT (equivalent to 20% of the margin).
Example: You buy a Georgian writing desk at auction for £800 and sell it for £1,400. Your margin is £600. VAT due = £600 ÷ 6 = £100. Without the Margin Scheme, VAT on the full £1,400 selling price would be £233.
If you sell an item for less than you paid — a loss — no VAT is due on that item. Under individual accounting, that loss can only offset the VAT on that specific item; it cannot reduce VAT on other sales. Under global accounting, losses can be pooled across all eligible stock in the period.
Record-keeping requirements for antique dealers
HMRC requires a stock book entry for every item bought and sold under the Margin Scheme. Each entry must include the stock number, a description of the item, the date and price of purchase, the name and address of the seller, the date and price of sale, the margin, and the VAT due. Records must be kept for at least six years.
For antique dealers, record-keeping can be especially complex because stock is often sourced from multiple channels — private house clearances, salerooms, estate agents, trade fairs, and online marketplaces. Each source has different documentation standards, and it is your responsibility to record the purchase price accurately regardless of whether you receive a formal receipt.
Common mistakes antique dealers make
One of the most frequent errors is applying the Margin Scheme to goods that were purchased with a full VAT invoice — for example, stock bought from a VAT-registered dealer who charged standard-rated VAT. These items must be accounted for under standard VAT rules, not the margin scheme.
Another common mistake is including restoration costs in the purchase price to artificially reduce the margin. HMRC is explicit that only the original acquisition cost can be used as the purchase price. The cost of cleaning, repairing, reupholstering, or restoring an item cannot reduce your margin, even if those costs were substantial.
Mixed lots — buying a job lot at auction where some items qualify for the scheme and others do not — also cause problems. You must apportion the purchase price reasonably across the individual items, which requires careful documentation at the time of purchase.
Selling antiques at auction
If you sell through an auction house acting as your agent, the hammer price is your selling price for Margin Scheme purposes. Seller's commission paid to the auction house reduces your net proceeds but does not change the margin calculation — your margin is still hammer price minus your original purchase price. If the auction house acts as principal (buying the goods from you and reselling in their own name), different rules apply and you should seek specific advice.
How AutoVAT helps antique dealers
AutoVAT builds a bespoke stock book and VAT tracking system around your specific sources and channels. Whether you're buying at Christie's, sourcing from house clearances, or selling through your own website and eBay simultaneously, we configure the system to pull in your data and calculate margins correctly for every item. At the end of each VAT quarter, your return figures are ready without hours of spreadsheet work.
