Tax schemes for a vehicle

A vehicle's tax scheme decides how tax is worked out on its sale. You set a default for new vehicles in Settings, and you can change it on any individual vehicle.

What this controls, and what it doesn't

The scheme is the vehicle's overall treatment: how tax applies to the sale price (the agreed price, or the advertised price when there is no agreed one). That is one half of the net margin.

The other half is your costs. The tax on each individual cost is set per line on the vehicle's Costs tab, not here. So the scheme handles the sale, and the per-line cost bands handle what you reclaim on each cost. The net margin combines the two: gross margin, minus the tax on the sale, plus the tax reclaimed on costs.

The schemes

• Normal: tax on the full sale price, the usual case. You still reclaim tax on costs as set per line.
• Margin: tax only on your margin, the sale minus the purchase cost, rather than the whole sale. Common for used vehicles bought from private sellers, where there was no reclaimable tax on the purchase. The buy price and any import tax are also left out of what you reclaim.
• Zero-rated: no tax on the sale (a zero rate), but you still reclaim the tax on your costs. Net margin comes out slightly above the gross, because you recover cost tax while charging none on the sale.
• Exempt: no tax on the sale, and you cannot reclaim the tax on your costs either, so that cost tax stays a cost and the net margin equals the gross. That reclaim difference is the key distinction from zero-rated.

Setting and changing the scheme

• The default scheme for new vehicles is set in Settings → Tax.
• To change it for one vehicle, edit the vehicle and pick a scheme; it defaults to your standard scheme. To leave a sale untaxed, use Zero-rated or Exempt. A vehicle you have not brought into tax yet (for example one left as "going forward only") shows its plain margin until you give it a scheme.

The scheme options you see match how your prices are quoted, so a region that quotes prices before tax will only offer what applies there.

The margin-scheme reminder

If a vehicle is on the margin scheme but has a cost line marked as import tax, the app shows a reminder on the costs card. Import tax is not reclaimable under the margin scheme, so those lines are left out of the reclaim. If you did reclaim that import tax, switch the vehicle to the normal scheme instead.

When a scheme has no effect

In a sales-tax region, where tax is collected from the buyer and is not reclaimable, the scheme does not change the margin, so the selector does not appear. See Setting up tax.