Why the motor trade loves the margin scheme
Second-hand car dealers buy vehicles from private individuals — who can't provide a VAT invoice. Without the margin scheme, dealers would pay VAT on the full selling price of every car, dramatically reducing profitability. The margin scheme means you only pay VAT on your profit per vehicle.
What records do car dealers need?
For every vehicle, HMRC requires:
- Vehicle description (make, model, year, VIN/registration)
- Date and price of purchase
- Name and address of seller
- Date and price of sale
- Name and address of buyer
- Calculated margin and VAT
Global accounting vs individual item
Car dealers typically use global accounting — pooling all purchases and sales within a VAT period and calculating VAT on the total margin. This simplifies record-keeping for high-volume dealers. AutoVAT supports both individual item accounting and global accounting.
Part exchanges
When a customer part-exchanges a vehicle, the part-exchange becomes a purchase at its agreed value. This is eligible for the margin scheme on the next sale — provided it was a private vehicle with no VAT invoice.
Exported vehicles
If you sell a margin scheme vehicle outside the UK, you may be able to zero-rate the sale. AutoVAT flags eligible export sales automatically, saving you from overpaying VAT.
AutoVAT for motor dealers
AutoVAT is configured specifically around your dealership's setup — the platforms you use, your accounting method (individual or global), and how you handle part-exchanges and exports. Our team builds and manages the integration for you, so your stock book stays accurate and HMRC-ready without any manual effort on your part. Get in touch to tell us about your setup.
