Using the VAT Margin Scheme for Pokémon Card Retailers

The Pokémon trading card market continues to grow, and many UK sellers now run full-time businesses buying and reselling cards. If most of your stock comes from private collectors, the VAT Margin Scheme can make a noticeable difference to your tax bill. It allows VAT-registered Pokémon sellers to pay VAT only on their profit rather than the full sale value.

How the VAT Margin Scheme Works

The scheme applies when you buy goods without VAT being charged to you. For Pokémon sellers, this usually includes raw collections, individual singles, graded cards, older sealed items and any stock sourced from private collectors.

VAT is calculated on the margin.
Margin = selling price minus purchase price.
VAT = margin × 1/6.

This often leads to a much lower VAT liability than using standard VAT rules.

When Pokémon Sellers Can Use the Scheme

You can use the scheme when the cards were bought from a private individual or another business that also used the scheme. Most purchases made on eBay, Facebook Marketplace and at card shows fall into this category.

You cannot use it if you bought new product from a wholesaler or a VAT-registered business that charged VAT in the usual way. In those cases, standard VAT must be applied when you sell the items.

A Simple Example

You buy a graded Charizard from a private seller for £200 and later sell it for £350.
Your margin is £150.
VAT due is £25.

Under normal VAT rules you would be paying VAT on the full £350, so the saving is significant.

Using the Scheme for Sealed Pokémon Product

Sealed product needs careful handling.

If you buy sealed items second-hand from collectors, the margin scheme may be used. This is common with vintage packs, older ETBs or sealed promos that are no longer in print.

If you buy modern sealed product from a distributor, you must use standard VAT rules because VAT was already charged to you on purchase.

Mixing modern and vintage stock is fine as long as you keep the correct records and track which items fall under each VAT treatment.

What Records You Need

HMRC expects a full audit trail. Keep clear evidence of both the purchase and the sale, including prices, payment details and the source of each item. A margin scheme stock log is essential and should show how the margin was calculated for every card or batch.

Invoices should not show VAT separately. Instead, include a note confirming that the VAT Margin Scheme has been applied.

The Global Accounting VAT Margin Scheme

For sellers trading beyond the UK, the Global Accounting Margin Scheme provides a way to simplify VAT reporting across multiple second-hand goods sales.

Under the Global Scheme, instead of calculating VAT separately for each individual sale, VAT is calculated on the total profit for a VAT period. This is useful for Pokémon sellers who handle large volumes of low-value cards, such as bulk collections or bundles.

The formula remains the same:
VAT = total margin for the period × 1/6.

Key points for Pokémon sellers using the Global Scheme:

• You must still record all purchases and sales, but you calculate VAT on the total margin for the whole period rather than per item.

• You cannot use the Global Scheme for individual high-value items worth more than £500, such as rare graded cards or sealed vintage boxes. These should be accounted for separately under the standard margin scheme.

• Once you choose to use the Global Scheme for smaller transactions, you must remain consistent throughout the VAT period.

• The scheme cannot be mixed with standard VAT accounting for the same goods.

For sellers who buy large collections of cards from private individuals and resell them piece by piece, the Global Accounting Margin Scheme can save significant time and simplify VAT reporting.

Why The Margin Scheme Matters for Pokémon Businesses

Using the scheme correctly can improve cash flow, allow more competitive pricing, and protect your margins, especially if your business relies heavily on second-hand collections.

For sellers working with both modern sealed and older collectible stock, choosing the correct VAT treatment for each category is essential. Accurate record keeping ensures you claim the right relief and stay compliant with HMRC rules.

How Rhombus Accounting Can Help

At Rhombus Accounting, we work with specialist retailers, collectors, and trading card businesses to set up the right systems from the start.

We can help you:

• Register for VAT and choose the right margin scheme

• Set up stock tracking and reporting tools for both UK and Global accounting

• Create compliant invoice templates and stock logs

• Review your VAT records before submission to avoid errors

Whether you’re a small seller moving into full-time trading or a large online retailer scaling up, our team can make sure your VAT setup works in your favour.

Meet Lewis

Lewis is a professional accountant and founder of Rhombus Accounting. He regularly shares his knowledge and best advice here on his blog and on other channels such as LinkedIn.

Book a call today to learn more about what Lewis and Rhombus Accounting can do for you.