If you buy second-hand jewellery in bulk, a job lot of mixed rings, broken chains and odd earrings off the public, the standard VAT margin scheme can be a record-keeping nightmare. You're supposed to track the margin on every single item, and when you've paid £40 for a carrier bag of assorted gold scrap, that's close to impossible.
The global accounting scheme exists for exactly this. It lets you account for VAT on your total margin across a period instead of item by item. For a busy second-hand counter, that's the difference between a workable system and an unworkable one.
This guide explains who it suits, the rules that trip jewellers up (the £500 cap and the precious-metals exclusion), and a worked example with current figures. It's written for jewellers and pawnbrokers buying low-value used stock from private sellers.
What is the global accounting scheme?
The global accounting scheme is a simplified version of the VAT margin scheme. Instead of working out VAT on each item you sell, you account for VAT on the difference between your total eligible purchases and total eligible sales in a VAT period, then pay VAT at one-sixth (16.67%) of that overall margin.
It's built for businesses that, in HMRC's words, "buy and sell bulk volume, low value goods" or that are "unable to maintain the records required of a standard margin scheme." That description fits a lot of jewellers buying mixed used stock.
The trade-off is that it only works for genuinely low-value items, and several categories of goods are shut out entirely. Get those exclusions wrong and you can land yourself with VAT on the full selling price rather than the margin.
How does the global accounting scheme work?
Under the scheme you don't calculate VAT on each sale. Instead, for each VAT period you total up your eligible purchases and your eligible sales, take the purchases away from the sales to find your gross margin, and multiply that margin by 1/6 to get the VAT due.
Two points catch people out. First, you add opening stock (the eligible stock you carried into the period) to your purchases figure. Second, if your purchases for a period come to more than your sales, you get a negative margin. You don't get a VAT refund. As HMRC puts it, "you must carry the negative margin forward to the next period and add it to your purchases in the period."
You also can't reclaim any input VAT on stock bought under the scheme, because there was no VAT on it to begin with. The whole point of a margin scheme is that you bought the goods without VAT being charged, typically from a private individual who is not VAT registered.
You don't need to apply or register to use it. You start by keeping the correct records and reporting it on your VAT return.
Which jewellery qualifies, and what's excluded?
Eligible goods are second-hand items, works of art, antiques and collectors' items that you bought without being charged VAT, so there was no VAT for you to reclaim. Most used jewellery bought from the public fits that description.
But two rules matter enormously for a jeweller:
The £500 cap. You cannot put an item through global accounting if its purchase value is over £500. HMRC is explicit: "if any individual item has a purchase value over £500, you must not sell it on under global accounting." A single antique ring you paid £700 for has to come out of the global pot. If it's otherwise eligible you can still use the standard margin scheme on it item by item, but not global accounting.
The blanket exclusions. Some goods can never go through global accounting whatever they cost: aircraft, boats and outboard motors, caravans and motor caravans, horses and ponies, and motor vehicles (except those broken up for scrap). These won't trouble most jewellers, but they're worth knowing because they sit alongside the precious-metals rule below.
Why investment gold and precious metals are a special case
This is the exclusion that bites jewellers, and it's easy to get wrong.
A margin scheme, global accounting included, cannot be used for precious metals, investment gold or precious stones. HMRC states it plainly: "You must not use a Margin Scheme to account for the sale of precious metals, investment gold, precious stones." The general VAT margin scheme guidance repeats that the scheme cannot be used for "precious metals, investment gold, precious stones."
So where does that leave second-hand jewellery? The key is the difference between a finished article and the raw material.
Investment gold is exempt from VAT and sits outside the scheme entirely. Investment gold means gold of a purity of not less than 995 thousandths in the form of a bar or wafer of a weight accepted by the bullion markets, plus certain gold coins. Supplies of investment gold are exempt, so there's no margin scheme question to answer.
Finished jewellery is normally standard-rated, not investment gold. A second-hand gold ring or chain is a fabricated article, not a bullion bar, so it isn't investment gold. Used jewellery you buy from the public, with no VAT charged to you, can generally go through a margin scheme (and global accounting if it's under £500 and you're dealing in bulk).
The danger zone is when you sell the metal as metal. If you're selling gold scrap, casting grain or bullion as a precious-metal supply rather than as a second-hand article, that falls outside the margin scheme. Sales of certain gold between VAT-registered businesses can also fall under the Special Accounting Scheme for gold, where the buyer accounts for the VAT instead of you (a reverse charge). That scheme "transfers the responsibility for paying the VAT on certain transactions in gold from the seller to the buyer," and the seller's invoice must state that the buyer accounts for the output tax.
In short: used rings, chains and watches bought cheaply off the public, fine for global accounting. Bullion, scrap sold as metal, and precious stones, not.
Worked example: a quarter of bulk second-hand jewellery
Illustrative example. Priya runs a second-hand jewellery counter and is VAT registered. She buys mixed used jewellery from the public, every item under £500, and uses global accounting. These figures are for one VAT quarter in 2025/26. The VAT fraction is one-sixth, because the VAT standard rate is 20%.
| Item | Amount |
|---|---|
| Opening eligible stock brought forward | £1,200 |
| Eligible purchases in the quarter | £8,300 |
| Total purchases (stock + buys) | £9,500 |
| Eligible sales in the quarter | £14,300 |
| Gross margin (sales minus total purchases) | £4,800 |
| VAT due (£4,800 x 1/6) | £800.00 |
So Priya pays £800.00 of VAT on the quarter, calculated once across the whole pot rather than on each of the hundreds of pieces she sold.
Now suppose the next quarter is quiet. She spends £6,000 on stock but only sells £5,400 worth:
| Item | Amount |
|---|---|
| Total purchases (including any stock b/fwd) | £6,000 |
| Eligible sales in the quarter | £5,400 |
| Margin | -£600 |
| VAT due | £0 |
The £600 negative margin isn't refunded. She carries it forward and adds it to her purchases in the following period, which reduces the VAT she pays then. That smoothing effect is one of the practical advantages of accounting on the pool rather than the piece.
Global accounting vs the standard margin scheme
Both schemes charge VAT at one-sixth of the margin and both need you to have bought the goods VAT-free. The difference is how you account and what you can put through.
| Feature | Standard margin scheme | Global accounting scheme |
|---|---|---|
| How you calculate VAT | Margin on each item, one by one | Total sales minus total purchases for the period |
| Per-item record of the margin | Required for every item | Not required; you pool the figures |
| Item purchase-value cap | No upper cap | Items over £500 cannot be used |
| Negative result on a sale or period | No VAT, but no refund on a loss-making item | Negative margin carried forward to next period |
| Best for | Higher-value, individually tracked pieces | Bulk, low-value mixed stock |
| Precious metals, investment gold, stones | Excluded | Excluded |
A practical pattern many jewellers use: run the bulk low-value stock through global accounting, and handle the occasional higher-value piece (over £500, or an item you want to track individually) under the standard margin scheme. The two can sit side by side as long as your records keep them clearly apart. If you'd like a second opinion on how to split your stock between the two, our accounting service for jewellers is built around exactly this kind of question.
What records must you keep?
The scheme is generous on calculation but strict on paperwork. HMRC requires that your records are "complete, up to date and clearly distinguishable from any other records," and you must keep them for six years.
In practice that means:
- A purchase record and a sales record for the goods in the scheme, with dates, a running total for each period, and enough description to identify what was bought and sold. A blanket entry like "assorted goods" is not acceptable.
- Purchase and sales documentation, so there's a clear audit trail behind the period totals you put on your VAT return.
- Eligible stock kept separate from anything sold under normal VAT rules, and items over £500 kept out of the global pot.
Get the description detail right at the point of buying. Reconstructing it months later, when a tray of mixed pieces has long since been sold on, is where jewellers come unstuck in a VAT inspection. Good bookkeeping habits at the counter are what make the scheme defensible.
Do the money laundering rules also apply?
Often, yes, and it's separate from VAT. If you accept or make high-value cash payments of 10,000 euros or more (or the equivalent in any currency) for goods, you're a high value dealer and must register with HMRC for money laundering supervision. That covers a single cash payment of 10,000 euros or more, several cash payments for one transaction reaching that total, and payments that look like they've been broken into smaller amounts to dodge the limit.
The threshold is about cash. If you're only ever paid large amounts by card, cheque or bank transfer, the high value dealer registration doesn't apply on that basis. The VAT scheme you use makes no difference to this, the money laundering test stands on its own, so a jeweller buying scrap and selling pieces for cash can easily need both.
Want to make sure your VAT scheme and your supervision obligations are both right? Book a call with a Zmartly accountant and we'll map your buying and selling to the rules that actually apply to your shop.
Frequently asked questions
Can I use the global accounting scheme for second-hand gold jewellery?
Generally yes, if it's a finished article (a ring, chain or watch) bought without VAT being charged to you, each item is under £500, and you're dealing in bulk. What you can't put through is investment gold (which is VAT exempt anyway) or gold sold as scrap or bullion (a precious-metal supply), because margin schemes cannot be used for precious metals, investment gold or precious stones.
What is the £500 limit in the global accounting scheme?
You cannot sell an item under global accounting if its purchase value was over £500. Items above that have to be taken out of the global pot. If they are otherwise eligible, you can still account for them individually under the standard margin scheme.
How is the VAT calculated under global accounting?
For each VAT period you add up eligible purchases (including opening stock) and eligible sales, subtract purchases from sales to get the gross margin, then multiply by one-sixth (16.67%). If purchases exceed sales you get a negative margin, which you carry forward to the next period rather than reclaiming.
Can I reclaim VAT on jewellery I buy for the scheme?
No. Margin schemes only work on goods you bought without VAT being charged, usually from private individuals who aren't VAT registered. There's no input VAT to reclaim, which is the whole basis of paying VAT only on your margin.
Do I have to register to use the global accounting scheme?
No separate registration is needed. You start using it by keeping the correct records and reporting the margin on your VAT return. You do, however, need to be VAT registered in the first place, and you must keep your scheme records for six years.
