Purpose-Built for UK Dealers
VAT Margin Scheme software that works out the margin VAT, keeps the VAT treatment you record for each purchase, flags unclear cases for your review, and produces the Stock Book. Built by someone who has kept a UK dealing business's stock book since 2013, through a long line of apps and systems.
Stock Book Report
1 Jan 2026 – 31 Mar 2026 · VAT Margin Scheme Eligible Items
5
2 in stock, 3 sold
£9,880.00
Total acquisition cost
£700.01
VAT on margin
Margin Scheme Items
Art Deco Diamond Ring, c.1925
JWL-2026-0089 · £3,450.00 → £5,200.00 · Margin £1,750.00
£291.67
VAT on margin
Cartier Tank Watch, 1970s
WCH-2026-0034 · £3,000.00 → £4,600.00 · Margin £1,600.00
£266.67
VAT on margin
Regency Rosewood Writing Box
ANT-2026-0057 · £680.00 · In stock
—
Not yet sold
Victorian Pearl Brooch
JWL-2026-0090 · £1,800.00 → £2,650.00 · Margin £850.00
£141.67
VAT on margin
Art Nouveau Enamel Locket
JWL-2026-0116 · £950.00 · In stock
—
Not yet sold
The VAT Margin Scheme is a scheme for VAT-registered dealers of second-hand goods, works of art, antiques, and collectors' items. Instead of charging VAT on the full selling price, dealers pay VAT only on the profit margin: the difference between what they paid for an item and what they sold it for. An item has to belong to one of those categories and to have been bought with no VAT charged. Special rules apply to works of art, antiques and collectors' items you import yourself, and to works of art bought from the creator or their heirs. Precious metals, investment gold, and precious stones are excluded from the scheme.
The Margin Scheme is optional, but for UK dealers of jewellery, watches, antiques, and luxury goods it can make a large difference. Stock bought in the UK from private individuals, or from any seller who charged you no VAT on the goods, carries no input VAT to reclaim, so without the Margin Scheme you would owe VAT on the entire selling price, wiping out your profit on lower-margin items.
The catch: HMRC requires meticulous record-keeping. Every eligible purchase needs a Stock Book entry with the date, description, purchase price, and seller details. Every sale needs a corresponding record. And you must track which items qualify for the Margin Scheme and which must use standard VAT accounting, because not every purchase is eligible.
This is the hard part: every figure has to stay consistent with the VAT treatment you recorded at purchase. GemJam records that treatment on each purchase and works out the margin scheme VAT on the sale from it.
The margin scheme calculation is straightforward in principle but error-prone in practice, especially when tracking hundreds of items across different VAT treatments.
Note the price you paid, then check the purchase against the eligibility conditions: the item counts as second-hand goods, a work of art, an antique, or a collectors' item, and you were charged no VAT on the purchase (special rules apply to works of art, antiques and collectors' items you import yourself, and to works of art bought from the creator or their heirs). Buying from a private seller usually means the VAT condition holds, though the purchase invoice is what settles it.
When the item sells, record the full selling price. The margin is the selling price minus the purchase price.
VAT is calculated at 1/6 (16.67%) of the positive margin. For example: buy at £500, sell at £800: the margin is £300 and the VAT due is £50. If the margin is zero or negative, no VAT is due.
Box 1 takes the output tax due on all eligible goods sold in the period. Box 6 takes their full selling price less the VAT due on the margin — not the full selling price. Box 7 takes the full purchase price of eligible goods bought in the period. You do not have to include margin scheme purchases or sales in boxes 8 and 9. Keep the Stock Book records for HMRC inspection. (Source: gov.uk, VAT margin schemes: VAT Return.)
Important: margin scheme sales invoices have their own requirements.
When you sell under the margin scheme, the invoice you give the buyer must show the total price, and you must not show VAT separately. It must also include one of these three phrases:
The invoice also needs the date, your name, address and VAT registration number, the buyer's name and address (or that of their business), the item's unique stockbook number, the invoice number and a description of the item. (Source: gov.uk, VAT margin schemes: keeping records.)
GemJam's customer invoice shows no VAT on margin scheme goods and carries one of those phrases. GemJam also generates a separate accounting invoice, with the full margin and VAT breakdown, for your records.
A spreadsheet is a fine place to start. As your stock grows, these are the details to watch.
One incorrect entry means the wrong VAT treatment on that item, and you might not notice until an HMRC inspection. GemJam keeps each purchase tied to the treatment you recorded, with unclear cases flagged for your review.
A broken formula in one row can carry into every calculation that depends on it. Margin scheme calculations need to be right across hundreds of items, and one mistake can carry through to your VAT return.
The stock book records, for each item, its purchase, sale, margin and VAT due. GemJam produces the Stock Book from the purchases and sales you record, so each entry traces back to the transaction behind it.
Margin scheme sales invoices have specific rules: you must not show VAT separately, and each invoice must include one of the three margin scheme phrases listed above. GemJam produces the invoice from the sale you record.
Every feature designed around the specific needs of UK dealers using the Margin Scheme.
Record the purchase and sale. GemJam calculates the margin and applies VAT at 1/6 (16.67%) automatically. No formulas to maintain, no manual calculation errors.
Set the VAT treatment as you record a purchase. Where the supplier record cannot settle it, GemJam asks you to choose before the purchase saves, then carries your answer through to the sale and the invoice.
Export the Stock Book and registers your accountant needs — or export to Xero-compatible format, ready for forwarding to Dext.
GemJam automatically generates customer-facing invoices, which show no VAT on margin scheme goods and carry one of the three margin scheme phrases, and accounting invoices (with full margin and VAT breakdown) for your records.
Record your purchases and sales. GemJam handles the rest in the background: your stock book, export register, and VAT figures are always up to date without a quarterly scramble.
PUR-2026-0042
Hatton Garden Estates · 15 Feb 2026
Subtotal
£8,250.00
VAT
£0.00
Margin Scheme
Total
£8,250.00
Line Items
Art Deco Diamond Ring, c.1925
JWL-2026-0089
£3,450.00
AvailableVictorian Pearl Brooch
JWL-2026-0090
£1,800.00
SoldCartier Tank Watch, 1970s
WCH-2026-0034
£3,000.00
AvailableEverything listed is in GemJam now, except items marked coming soon.
New to the margin scheme? Read our complete guide to the VAT Margin Scheme for jewellery and antique dealers — covering eligibility, worked examples, and record-keeping requirements.
Selling second-hand goods through Shopify? Our step-by-step guide explains how to handle the VAT Margin Scheme on Shopify — including common pitfalls and how GemJam automates the process.
Looking for a tool built around your trade? See our jewellery dealer software, antique dealer software, watch dealer software, and designer handbag dealer software pages, each with the VAT Margin Scheme built in.
Practical answers for UK dealers using or considering the Margin Scheme.
The VAT Margin Scheme is a method that lets a VAT-registered dealer pay VAT on the profit margin of an eligible item rather than on its full selling price. Two conditions have to hold before an item can go on the scheme. It has to fall inside one of the scheme categories, meaning second-hand goods, works of art, antiques, or collectors’ items. You must also not have been charged VAT when you bought it, which is why stock bought from private individuals and other sellers who are not VAT-registered can go on the scheme. Special rules apply to works of art, antiques and collectors’ items you import yourself, and to works of art bought from the creator or their heirs. Buy a ring from a private individual for £500, sell it for £800, and VAT falls on the £300 margin rather than the £800. Precious metals, investment gold, and precious stones are excluded from the scheme.
GemJam generates a Stock Book from the purchases and sales you record — including dates, descriptions, purchase prices, selling prices, and the 16.67% profit margin VAT calculation. (HMRC’s stock book requirement itself carves out the Auctioneers scheme and occasional sales.) It also keeps an Export Register, which is our name for a collation of the export evidence Notice 703 requires you to obtain and retain in order to zero-rate an export; HMRC does not mandate a register by that name. GemJam was built by someone who has kept a UK dealing business’s stock book since 2013 and understands the specific record-keeping requirements.
Yes. Every purchase carries its own VAT treatment and you set it as the purchase goes in. If the supplier record does not settle it, GemJam explains what that record does and does not tell you, then asks you to confirm the treatment before the purchase saves. Only your paperwork shows whether VAT was actually charged on the goods. Each item is then held to what you recorded: margin scheme sales are worked out at 1/6 (16.67%) of the margin, standard VAT sales on the full selling price.
Yes. Import from Shopify, upload a spreadsheet, or add items one by one. Each piece becomes its own record with photos, provenance details, and purchase information. The import itself takes minutes. Backfilling opening stock for the margin scheme takes as long as your existing purchase records need.
GemJam generates a full Stock Book, purchase and sale registers, and profit reports by period. Reports can be exported in Xero-compatible format, ready for forwarding to Dext for automated processing.
GemJam is purpose-built for dealers of unique items: every piece gets its own purchase price, provenance, and margin. It handles VAT Margin Scheme calculations natively, pushes listings to Shopify (eBay coming soon), tracks individual item profitability, and produces the Stock Book and invoices from the same records.
GemJam works out the margin VAT, keeps the VAT treatment you record for each purchase, and produces the Stock Book. Join the waiting list for early access.