Thanks for your question I am Sam and I am one of the UK tax experts here on Just Answer
There are two types of tax you need to consider
1) Income tax of you are a sole trader (or corporation tax if you are a limited company and
2) VAT The margin scheme relates to VAT, so I assume this is the element of tax you are seeking advise on.
Basically if you are going to trade over the VAT threshold (which currently sits at £81,000) then you must register for VAT.
The margin scheme is in place for those that sell second hand goods, such as motor vehicles.
The normal VAT position is one on which you normally charge VAT on your sales, and reclaim VAT on your purchases and either pay over the difference to HMRC, or , if you have been charged more, that you collected, then claim a refund on the difference,
VAT margin schemes are different and even though you have no VAT to recover on your purchase (on the second hand vehicles), you only calculate VAT on the value - your margin - that you add to the goods when you sell them
• if you sell something for less than what it cost you to buy, you won't have to account for VAT on the sale
• you can use a margin scheme on some goods and standard VAT accounting on others
•you can still reclaim VAT on your purchases for other business expenses, such as overheads, repairs, parts or accessories
So in essence you may find you operate two schemes within the same trade, but this ensures that you do not lose out on VAT suffered from other purchases or costs to run the business
I have added a link here that details this more - but basically - you charge VAT just on your mark up of the vehicle, not the whole second hand resale price.
This is what is owed to HMRC, and from this you deduct the VAT you have suffered on all costs other than the purchase of second hand vehicles
This basically allows you to trade more tax efficiently in terms of what you charge for VAT. But note that you only need to consider VAT - if, and when, in any 12 month period you will exceed the threshold for VAT, until then you need not register nor charge any VAT or submit VAT returns.
Do feel free to ask any follow up questions