The Special Second-Hand Scheme a.k.a. The Margin Scheme
Welcome to our article on the special VAT scheme for silver. If you're looking to purchase low-VAT silver, please click here.
What Is the Special Scheme?
It is a VAT scheme or treatment, which is aimed at avoiding consumers being charged VAT twice on the full price of second-hand goods. This is what used to happen when VAT was first introduced in the UK.
When a VAT registered trader buys and sells second-hand goods, which would normally be taxable, they are entitled to account for VAT only on the gross profit.
The scheme applies to almost all second-hand goods, including most coins, medallions, and bars. However, it specifically excludes “investment gold coins and bars” as these are exempt from VAT in the EU and UK.
It normally applies to goods on which VAT has already been paid on purchase by a private (non-VAT registered) individual, or which was privately owned before VAT was introduced.
This makes second-hand silver bars and coins very attractive to investors looking to buy cheap silver bullion. The actual VAT that you will pay on our pre-owned silver coins and bars is almost negligible. This is also the case with our palladium bullion products.
Does It Apply to Gold?
It does not apply to “investment gold” in the form of coins or bars, because these are exempt.
However, it does apply to some gold coins (those which are not “investment gold”). It also applies to most other items made of or containing gold, such as gold watches, gold jewellery, and scrap gold.
You can read more on our page on what exactly is investment gold. You may also be interested in the HMRC lists of investment gold coins, which places more coins into "investment gold" that would otherwise fail the official definition of investment gold.
VAT Margin Scheme on Silver
The margin scheme applies to second-hand silver coins, silver bars, medallions, and other items made of or containing silver.
The only exception is on precious metal bullion including silver, which is sold at a price below or at its intrinsic value. The HMRC website is very obscure and it is difficult to find better definitions of what would constitute precious metal as bullion. However, it would include all precious metal scrap, which would be taxable at standard rate.
HMRC keep the wording vague and this is the statement as of 15th August 2019:
Goods (including coins) consisting in precious metals or any supply of goods containing precious metals where the consideration for the supply (excluding any VAT) is, or is equivalent to an amount which does not exceed the open market value of the metal contained in the goods.
This can be applied when we sell second-hand items, medallions and coin sets which are not legal tender. (It is irrelevant whether silver coins are legal tender or not.)
VAT on Second-Hand Silver Coins and Bars
Chards make an active market in second-hand silver coins, bars, and medallions, when available.
The only VAT our customers pay is that included in our margin. So, for example, if we buy a second-hand silver bar for £100, and sell it for £110, the £10 “profit” includes £1.67 of VAT (assuming 20% standard rate). We are not permitted to issue a VAT invoice showing this VAT element, and the buyer cannot reclaim it.
Before the margin scheme scheme was introduced, to sell the same item at £110, we would have had to charge an additional £22 in VAT, which we would pay over to HMRC.
Dealer to Dealer
The margin scheme can also operate between VAT registered traders where the first dealer acquired them from a private source, and passed on to a second or subsequent trader, via the use of a second-hand scheme invoice. The invoice usually contains a statement that it is being dealt under the second-hand special scheme, and that no VAT can be reclaimed on it.
Second-Hand 1oz Silver Coins
Worldwide, the most popular size and weight of silver bullion coin is one troy ounce. A number of the world’s leading bullion mints produce a variety of different 1oz silver bullion coins.
Second-hand or secondary market coins can be bought at lower prices, and offer better value, than new (VATable) ones, when they are available on the second-hand special scheme. Our selection varies considerably, as most of our secondary market special scheme silver coins tend to sell out quickly.
We also make an active market in other sizes and weights of silver bullion coins. When we get stocks of these other sizes, they also tend to sell out quickly.
The best selling 1oz coin is the most traded size all over the world. Issued by all the major mints, special scheme silver coins are a great way to buy cheaper Britannias, Maples, Eagles and Philharmonics.
Compare Prices of Silver Coins:
We Stock a Large Range of Silver Pre-owned Bars
Everyday, we buy silver bars from customers, which are then immediately available on the special scheme to buy once again. Refiners include Metalor, Degussa and Pamp to name a few...
Second-Hand Silver Bars
We sell second-hand silver bars from 10g to 5 kilos. Generally, the heavier the bar, the lower the premium on the bar. Our most popular size bar is the one kilogram silver bar.
Compare Silver Bar Prices:
Second-Hand Silver Rounds
Silver rounds do not have a denomination or face value so they are not classed as legal tender. A silver round is a piece of silver that is usually shaped like a coin. However, recently refiners have been more inventive in supplying more interesting forms of silver rounds, eg. cubes, buttons and skulls.
Silver rounds often feature designs that are very appealing to collectors as well as investors. For example, silver rounds were issued to raise funds for Donald Trump’s presidential election campaign. His supporters and collectors of political exonumia were keen to add them to their collection.
The price that we charge for special scheme silver bullion rounds will be competitive and compare favourably with individual purchases of silver bullion coins.
Second-hand Silver Medallion Sets
Medallions usually combine intricate designs, historical elements and highly defined finishes on silver.
Whilst bullion coins are usually struck once or twice, medallions are usually struck between four and seven times and come in presentation boxes or folders.
We often sell special scheme silver medallion sets at a low premium above silver spot. These second-hand silver medallion sets offer a fantastic way to combine buying investment silver with numismatic interest.
How Do I Know This Second-Hand Silver Is Genuine?
We have over 55 years of experience in dealing with precious metals. Unlike gold, the amount of fake silver that we see is less common.
This is partly due to the low silver price compared to the price of gold per troy ounce. It simply is not usually worth a counterfeiter's time and effort to make fake silver coins or bars. We have seen larger weight fake silver bars but these are quickly identified by our team. Giveaway clues include the finish, the appearance, weight or that 'certain something' that just feels wrong.
Our pre-owned silver bars and coins pass through a number of checkpoints before they are sold. Our reputation as the UK's Bullion Dealer of the Year for the last four years is based on our customers' trust and respect. We guarantee that you will only buy authentic coins and bars from Chard.
You may wish to view all of our articles on our silver guide.
You may wish to view all of our articles on our gold guide.