Purpose-Built for UK Dealers
VAT Margin Scheme software that handles the calculations, tracks eligibility, and generates HMRC-compliant reports automatically. Built by a former UK dealer of jewellery, watches, antiques, and luxury goods who spent years wrestling with spreadsheets.
VAT Return Report
Q1 2026 · 1 Jan 2026 – 31 Mar 2026
£4,216.50
VAT due on sales
£1,840.00
VAT reclaimed
£2,376.50
To pay HMRC
MTD Box Values
The VAT Margin Scheme is an HMRC-approved method 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.
For UK dealers of jewellery, watches, antiques, and luxury goods, the Margin Scheme is essential. Most stock is purchased from private individuals, estate sales, or other non-VAT-registered sources. Without the Margin Scheme, you would owe VAT on the entire selling price with no input VAT to reclaim — 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 where most dealers struggle. Spreadsheets can track the numbers, but they cannot enforce the rules, flag errors, or generate the reports HMRC expects at inspection.
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 for the item and confirm the seller is not VAT-registered (making the purchase eligible for the Margin Scheme).
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.
Include the total output VAT from margin scheme sales in Box 1 of your VAT return. The full selling prices go in Box 6. Keep the Stock Book records for HMRC inspection.
Important: You must not show VAT separately on margin scheme invoices.
Customer-facing invoices must show only the total price. The VAT element is not disclosed. This is a common compliance error that GemJam handles automatically by generating dual invoice formats — one for customers and one for your records.
Most UK dealers start with spreadsheets. They work at first — until they don't.
Spreadsheets cannot enforce which purchases qualify for the Margin Scheme. One incorrect entry means the wrong VAT treatment on that item — and you might not notice until an HMRC inspection.
A broken formula in row 47 silently corrupts every calculation below it. Margin scheme calculations require perfect accuracy across hundreds of items — one mistake cascades through your entire VAT return.
HMRC expects a clear, traceable record from purchase to sale. Spreadsheets let anyone edit any cell at any time with no history. If HMRC queries a figure, you cannot prove when or how it was entered.
Margin scheme invoices have specific rules — you must not show VAT separately. Spreadsheets cannot generate compliant invoices, so you end up creating them manually and hoping you remember the rules each time.
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.
Mark each purchase as from a VAT-registered or non-VAT-registered seller. GemJam enforces the correct VAT treatment for every item throughout its lifecycle.
Generate your VAT Return Report with output VAT split between margin scheme and standard transactions. Export the Stock Book and registers your accountant needs — or export to Xero-compatible format and email to Dext.
GemJam automatically generates customer-facing invoices (no VAT shown, as required) 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 return 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
AvailableHow purpose-built software compares to generic tools for margin scheme compliance.
| Feature | GemJam | Spreadsheets | Airtable + Zapier | Generic Inventory | Dedicated Dealer Software |
|---|---|---|---|---|---|
| Automatic margin VAT calculation | Yes | Manual formulas | Custom build needed | No | Yes |
| Purchase eligibility tracking | Yes | No | Custom build needed | No | Yes |
| HMRC-compliant Stock Book | Yes | Manual setup | Custom build needed | No | Yes |
| Dual invoice formats | Yes | No | No | No | Varies |
| VAT Return Report | Yes | Manual calculation | Custom build needed | No | Yes |
| Unique item management | Yes | Limited | Yes | Bulk-focused | Yes |
| E-commerce integrations (Shopify; eBay coming soon) | Yes | No | Via Zapier (extra cost) | Varies | No |
| Accounting export (Xero/Dext format) | Yes | No | Via Zapier (extra cost) | Varies | Limited |
You could commission a bespoke system tailored to your exact workflow. But expect 3-6 months of development, £20,000-50,000+ in build costs, and ongoing maintenance fees for hosting, updates, and bug fixes. You would also need to specify every margin scheme rule yourself — and keep it current as HMRC requirements change.
GemJam gives you purpose-built VAT Margin Scheme software, ready to use — with updates included.
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.
Practical answers for UK dealers using or considering the Margin Scheme.
The VAT Margin Scheme is an HMRC-approved method that allows VAT-registered dealers to pay VAT only on the profit margin of eligible second-hand goods, rather than the full selling price. It applies to dealers of second-hand goods, works of art, antiques, and collectors’ items purchased from non-VAT-registered sellers. If you buy a ring from a private individual for £500 and sell it for £800, you pay VAT on the £300 margin, not the full £800.
Yes. GemJam generates the Stock Book, Export Register, and purchase and sale records that HMRC requires for margin scheme dealers — including dates, descriptions, purchase prices, selling prices, and the 16.67% profit margin VAT calculation. The VAT Return Report provides output VAT figures ready for your Making Tax Digital submission. GemJam was built by a former UK dealer who understands the specific record-keeping requirements.
Yes. GemJam tracks the VAT status of every purchase so you know exactly which items qualify for the Margin Scheme and which must use standard VAT accounting. When you record a purchase, you indicate whether it was from a VAT-registered or non-VAT-registered seller. GemJam then applies the correct VAT treatment automatically when the item is sold.
Yes. You can import items from Shopify, upload a spreadsheet, or add items individually. Each piece gets its own record with photos, provenance details, and purchase information. Most dealers are up and running within a day.
GemJam generates a VAT Return Report with output VAT figures broken down by margin scheme and standard VAT transactions. You also get a full Stock Book, purchase and sale registers, and profit reports by period. Reports can be exported in Xero-compatible format, or emailed to Dext for automated processing.
Generic inventory systems are built for warehouses and retail — they assume interchangeable units with fixed prices. Even dedicated dealer software typically pushes items only to its own website, not to the platforms where buyers actually are. 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 generates HMRC-compliant documentation.
GemJam handles the calculations, tracks eligibility, and generates HMRC-compliant reports. Join the waiting list for early access.