The VAT margin scheme for pre-owned watches
Selling pre-owned watches? Whether you pay VAT on your margin or on the whole price depends on where each watch came from. Here's how to tell, from HMRC's rules, in plain English.
A watch you bought privately for £2,400 and sold for £3,100
| VAT on the whole price£3,100 ÷ 6 | £516.67 |
| VAT under the margin schemeonly on your £700 margin: £700 ÷ 6 | £116.67 |
That's £400.00 less VAT on one watch, if it qualifies.
Where the watch came from decides it
- Bought from a private seller in the UK: yes. Make out the purchase invoice yourself, with the date, their name and address, yours, a description and the price you paid.
- Bought from a UK dealer who sold it under the margin scheme: yes. Their invoice says "margin scheme - second hand goods" and shows no VAT. Keep it, and note their stock number.
- Bought from a UK business that charged you VAT: no. Reclaim the VAT you paid in the normal way, and charge VAT on the full selling price.
- Imported, from Switzerland, Japan, the US, the EU or anywhere outside the UK: no. HMRC says you can't use a margin scheme for goods you import into the UK unless they're works of art, collectors' items or antiques. Reclaim the import VAT in the normal way, and charge VAT on the full selling price.
- New from a brand or authorised dealer: no. The margin scheme is for second-hand goods.
Not sure about a particular watch? The eligibility checker asks the same questions.
What goes into the margin
- Purchase price: what you paid the seller, including anything they charged on top, such as delivery or an auction buyer's premium.
- Not servicing or parts: servicing, repairs, new straps, parts and overheads can't be added. Reclaim the VAT on them in the normal way.
- Selling price: everything the buyer pays, including delivery you charge them.
- Sold at a loss: no VAT is due on that watch, but the loss can't reduce the VAT on other watches under the standard scheme.
Each watch needs its own line in your stock book. Tip: put the reference and serial number in the description, so every watch is easy to trace from purchase to sale.
Global accounting usually won't fit
HMRC's global accounting scheme only covers items you buy for £500 or less each. Most pre-owned luxury watches cost more, so they go through the standard margin scheme, one watch at a time. Cheaper watches and straps bought without VAT can use global accounting.
On Shopify
Shopify works out VAT on the whole price, so margin scheme watches need a few settings and your own records. Our Shopify guide walks through them. The calculator works out any single sale, and the VAT return tool works out a quarter.
This guide is based on HMRC's margin scheme guidance and its import rules, for VAT-registered businesses in Great Britain. It doesn't replace advice from your accountant.
Selling watches on Shopify? MarginVAT keeps imports out of the scheme for you.
When you add a watch, MarginVAT asks where it came from, keeps the stock book, works out the VAT on every sale and issues the margin scheme invoice. We'll email you once, at launch.