VAT Margin Scheme Calculator
Work out the VAT you owe under the HMRC VAT Margin Scheme. Add one or more items, switch between individual and global accounting, and see your margin, VAT and net profit in real time.
Individual item accounting: VAT is calculated per item. Losses on one item do not offset profits on another.
VAT is calculated at 1/6 of the positive margin, per HMRC VAT Notice 718. Figures here are an estimate — always confirm with your accountant.
How to use this calculator
Add your items
Enter the purchase price and selling price for each eligible item. Add a short description so you can keep track.
Pick an accounting method
Use individual item accounting if you deal with a small number of higher-value items. Use global accounting if you deal in volume, typical for car dealers.
Check your VAT
VAT due = 1/6 of the positive margin. Loss-making items don't reduce your VAT bill under individual accounting.
Frequently asked questions
How is VAT calculated under the VAT Margin Scheme?
VAT is 1/6 of your positive margin — the difference between what you paid for an item and what you sold it for. If you buy a car for £5,000 and sell it for £6,200, the margin is £1,200 and the VAT due is £200. This follows HMRC VAT Notice 718.
What is the difference between individual and global accounting?
Under individual item accounting, VAT is calculated per item and losses on one item cannot offset profits on another. Under global accounting, you calculate VAT on your total margin across all eligible sales in a period, so losses do offset profits. Global accounting is only available for items bought for £500 or less.
Do I pay VAT if I sell an item at a loss?
No. If you sell a margin scheme item for less than you paid, the margin is negative and no VAT is due on that sale. Under individual accounting the loss cannot be offset against other items; under global accounting it reduces your total margin for the period.