The second-hand motor vehicle payment scheme allows you to claim a VAT-related payment on your VAT Return if you:
- are VAT registered in the UK and have a business establishment in the UK
- buy an eligible second-hand motor vehicle in Great Britain
- move that vehicle to Northern Ireland with the intention to resell it in Northern Ireland or to the EU
If you buy second-hand vehicles in Great Britain and move them to Northern Ireland you will no longer be able to use a margin scheme when you sell them.
If you are VAT registered in the EU, you may also be able to use the payment scheme if you buy second-hand vehicles in Great Britain and export them to the EU for resale.
Find out about claiming a VAT-related payment if you buy second-hand motor vehicles in Great Britain and export them to the EU for resale.
Who can use the payment scheme
If you are VAT registered in the UK, you can use the payment scheme if:
- your business activity involves buying and selling second-hand vehicles or you make occasional purchases of second-hand vehicles for resale
- you buy an eligible vehicle in Great Britain and move it to Northern Ireland with the intention to resell it in Northern Ireland or to the EU
If you buy second-hand motor vehicles in Northern Ireland or from the EU
If you buy second-hand vehicles in Northern Ireland or from the EU, you will not be able to use the payment scheme. You may be able to use the VAT margin scheme for second-hand vehicles.
If you buy a second-hand motor vehicle in the Isle of Man
If you buy an eligible vehicle in the Isle of Man and move it to Northern Ireland for resale, you can use this scheme to claim a payment in the same way as if the vehicle was purchased in Great Britain.
How the payment scheme works
You can use the scheme to claim a VAT-related payment for any eligible second-hand motor vehicle that you buy in Great Britain and then move to Northern Ireland for resale.
You do not have to move the vehicle from Great Britain to Northern Ireland yourself. You can arrange for the seller or another party such as a haulier or carrier to move it to Northern Ireland for you.
You must enter details of the vehicle in your stock book.
You should also provide other evidence that you intend to sell the vehicle. For example, advertising it for sale or it being on your garage forecourt.
You can only use the scheme if your intention is that the first use to which you put the vehicle when you move it to Northern Ireland is to resell it. You cannot use the scheme if you intend to use it within the business or privately, even if you intend to sell the vehicle afterwards.
You can use the scheme if you plan to hold the vehicle out for sale but need to do repair or other work on it first. You can also use the scheme if you hold the vehicle out for resale but use it for another purpose (such as a courtesy car) for a short period of time while trying to sell it.
How to calculate the payment amount
The payment amount is calculated on the VAT fraction on the value of the vehicle that you purchased in Great Britain at the time that you move it to Northern Ireland.
In most cases the value will be the full purchase price you paid for the vehicle.
If the rate of VAT is 20%, you should apply the VAT fraction of one-sixth to the purchase price paid in Great Britain (everything paid for the vehicle as part of the eligible purchase). You should not include any cost of bringing the vehicle to sale. For example, the cost of any repairs you have made before resale.
For example, if you buy an eligible second-hand car in Great Britain for £12,000 the payment amount would be £2,000 (£12,000 × one-sixth).
How to claim a payment on your VAT Return
You should make the claim on your VAT Return and treat the payment amount as if it were input tax.
You must keep records showing the calculations of the payment value.
You should follow the normal rules for completing your VAT return.
Motor vehicles in stock when the payment scheme is introduced on 1 May 2023
You will continue to be able to use the VAT margin scheme for eligible motor vehicles that you purchase in Great Britain and move to Northern Ireland before May 2023.
If you still have these vehicles in stock on 1 May 2023, they will continue to be eligible for the VAT margin scheme if they are sold by 31 October 2023. If they are sold after 31 October 2023, VAT will have to be accounted for on the full selling price of the vehicle
Accounting for VAT on the motor vehicle when you sell it on
If you buy second-hand vehicles in Great Britain and move them to Northern Ireland you will not be able to use a margin scheme when you sell them.
You can find guidance on accounting for VAT when you sell the motor vehicle:
The second-hand motor vehicle payment scheme allows you to claim a VAT-related payment on your VAT Return if you:
- are VAT registered in the UK and have a business establishment in the UK
- buy an eligible second-hand motor vehicle in Great Britain
- move that vehicle to Northern Ireland with the intention to resell it in Northern Ireland or to the EU
If you buy second-hand vehicles in Great Britain and move them to Northern Ireland you will no longer be able to use a margin scheme when you sell them.
If you are VAT registered in the EU, you may also be able to use the payment scheme if you buy second-hand vehicles in Great Britain and export them to the EU for resale.
Find out about claiming a VAT-related payment if you buy second-hand motor vehicles in Great Britain and export them to the EU for resale.
Who can use the payment scheme
If you are VAT registered in the UK, you can use the payment scheme if:
- your business activity involves buying and selling second-hand vehicles or you make occasional purchases of second-hand vehicles for resale
- you buy an eligible vehicle in Great Britain and move it to Northern Ireland with the intention to resell it in Northern Ireland or to the EU
If you buy second-hand motor vehicles in Northern Ireland or from the EU
If you buy second-hand vehicles in Northern Ireland or from the EU, you will not be able to use the payment scheme. You may be able to use the VAT margin scheme for second-hand vehicles.
If you buy a second-hand motor vehicle in the Isle of Man
If you buy an eligible vehicle in the Isle of Man and move it to Northern Ireland for resale, you can use this scheme to claim a payment in the same way as if the vehicle was purchased in Great Britain.
How the payment scheme works
You can use the scheme to claim a VAT-related payment for any eligible second-hand motor vehicle that you buy in Great Britain and then move to Northern Ireland for resale.
You do not have to move the vehicle from Great Britain to Northern Ireland yourself. You can arrange for the seller or another party such as a haulier or carrier to move it to Northern Ireland for you.
You must enter details of the vehicle in your stock book.
You should also provide other evidence that you intend to sell the vehicle. For example, advertising it for sale or it being on your garage forecourt.
You can only use the scheme if your intention is that the first use to which you put the vehicle when you move it to Northern Ireland is to resell it. You cannot use the scheme if you intend to use it within the business or privately, even if you intend to sell the vehicle afterwards.
You can use the scheme if you plan to hold the vehicle out for sale but need to do repair or other work on it first. You can also use the scheme if you hold the vehicle out for resale but use it for another purpose (such as a courtesy car) for a short period of time while trying to sell it.
How to calculate the payment amount
The payment amount is calculated on the VAT fraction on the value of the vehicle that you purchased in Great Britain at the time that you move it to Northern Ireland.
In most cases the value will be the full purchase price you paid for the vehicle.
If the rate of VAT is 20%, you should apply the VAT fraction of one-sixth to the purchase price paid in Great Britain (everything paid for the vehicle as part of the eligible purchase). You should not include any cost of bringing the vehicle to sale. For example, the cost of any repairs you have made before resale.
For example, if you buy an eligible second-hand car in Great Britain for £12,000 the payment amount would be £2,000 (£12,000 × one-sixth).
How to claim a payment on your VAT Return
You should make the claim on your VAT Return and treat the payment amount as if it were input tax.
You must keep records showing the calculations of the payment value.
You should follow the normal rules for completing your VAT return.
Motor vehicles in stock when the payment scheme is introduced on 1 May 2023
You will continue to be able to use the VAT margin scheme for eligible motor vehicles that you purchase in Great Britain and move to Northern Ireland before May 2023.
If you still have these vehicles in stock on 1 May 2023, they will continue to be eligible for the VAT margin scheme if they are sold by 31 October 2023. If they are sold after 31 October 2023, VAT will have to be accounted for on the full selling price of the vehicle
Accounting for VAT on the motor vehicle when you sell it on
If you buy second-hand vehicles in Great Britain and move them to Northern Ireland you will not be able to use a margin scheme when you sell them.
You can find guidance on accounting for VAT when you sell the motor vehicle:
