This guidance will help you to quickly see who can use the second-hand motor vehicle payment scheme, how to treat sales on stock and provides links to further help.
- Who can use the scheme?
- What vehicles can be claimed on?
- How to calculate the payment amount
- How do you claim the refund?
- How do you treat sales of stock purchased in GB from 1st May 2023?
- How do you treat sales on stock purchased in GB before 1st May 2023?
- Further information
The second-hand motor vehicle payment scheme will commence 1 May 2023. It will apply to second-hand vehicles that you buy in Great Britain (GB), move to Northern Ireland (NI) or the European Union (EU) and then resell.
You can use the payment scheme if you:
- Are VAT registered in NI or the EU and your business activity involves buying and selling second-hand vehicles or you make occasional purchases of second-hand vehicles for resale.
- Buy an eligible second-hand motor vehicle in GB.
- Move that vehicle to NI or the EU with the intention of reselling it in NI or the EU.
What vehicles can it be claimed on?
The scheme can be used for second-hand vehicles that have been bought in GB from VAT-registered dealers if sold to you under the margin scheme (this should be clear from the invoice you receive).It also applies to second-hand vehicles bought in GB from businesses that are not registered for VAT, and from private individuals.
How to calculate the payment amount:
The refund payment amount is calculated on the VAT fraction on the value of the vehicle that you purchased in GB at the time that you move it to NI or the EU. For example, if you buy an eligible second-hand car in GB for £12,000 the refund payment amount would be: £2,000 (£12,000 × 1/6).
How do you claim the refund?
- NI established VAT registered businesses - claim the refund on their VAT return.
- EU established VAT registered businesses - a separate mechanism for claiming a refund on margin vehicles will be available from August 2023. Further guidance from HMRC about the process for making a claim will be published in due course.
For sales made to VAT registered businesses in Ireland
For sales made to private individuals in Ireland
For sales made to businesses and private individuals in Northern Ireland
|The sale can be zero-rated subject to the normal rules.||
UK VAT will be charged on the full selling price at the standard rate.
Note: Revenue Commissioners have, to date, not confirmed if import VAT in EU will be due on these sales.
|VAT will be charged on the full selling price at the standard rate.|
How do you treat sales on stock purchased in GB before 1 May 2023?
- If sold before 31 October 2023 you can still use margin scheme on eligible vehicles
- If purchased prior to 1 May 2023 and still in stock/sold after 31 October 2023, VAT will have to be accounted for on the full selling price of the vehicle.
- No retrospective claim for refund payment of VAT will be allowed on vehicles that were imported from GB to NI before 1 May 2023.
- NI car dealers apply can continue to use the second-hand margin scheme on cars moved to Northern Ireland before 1 January 2021, which are sold after 31 October 2023.
Links to further HMRC Guidance
Claim a VAT-related payment if you buy second-hand motor vehicles in Great Britain and move them to Northern Ireland for resale - GOV.UK
Claim a VAT-related payment if you buy second-hand motor vehicles in Great Britain and export them to the EU for resale - GOV.UK
Submit a claim using the second-hand motor vehicle payment scheme if you do not have a UK business establishment - GOV.UK
Check which motor vehicles are eligible for the second-hand motor vehicle payment scheme - GOV.UK
Check which records to keep for second-hand vehicles you export to the EU for resale - GOV.UK
Article reviewed: May 2023