A forecourt full of stock isn’t money in the bank.
Every unit sold looks profitable. Until you count the reconditioning, the days in stock and the interest.
Ask a dealer how many units went out last month and you’ll get the answer in seconds. Ask what each one really made, after prep, transport, stocking interest and the part-exchange that’s still sitting at the back of the yard, and it goes quiet. As specialist motor trade accountants, based in Melton Mowbray, Leicestershire, and working with car and van dealers, garages and hire firms across the UK, we close that gap. We get VAT on vehicles right, track profit unit by unit and department by department, and turn stock back into cash faster.
- ACCA accountants
- VAT margin scheme
- Stock days & per-unit profit
- Xero, QuickBooks, Sage & bespoke systems
What motor trade accountants handle
The parts of a dealer’s finances a general accountant tends to treat like any other shop.
VAT on vehicles
The margin scheme, qualifying cars, vans bought on a VAT invoice, part-exchanges, warranties, imports and exports. Each unit’s history decides how much VAT you owe.
How we helpWe check the VAT treatment unit by unit, keep the stock book HMRC expects, and stop you paying VAT you don’t owe. VAT on vehicles ↓
Profit per unit
Purchase price, reconditioning, transport, valeting, warranty and stocking interest, set against the selling price and any finance commission earned.
How we helpA real profit figure for every vehicle, so you know which units, sources and buyers actually make you money. The numbers that matter ↓
Stock & stocking finance
Stock valued properly, ageing tracked, write-downs made on time, and stocking loans, curtailments and interest kept under control.
How we helpMonthly stock days by vehicle type, an ageing report you’ll actually use, and reconciliations with your stocking lender. Cash stuck in stock ↓
Departmental reporting
Vehicle sales, workshop, parts, MOTs, bodyshop, hire and finance commission each have their own margins and overheads.
How we helpA chart of accounts built around your departments, so a busy workshop can’t hide a loss on vehicle sales, or the other way round. What a monthly report should show ↓
Customer finance & the FCA
Offering finance lifts sales and earns commission, but brings FCA authorisation, lender approval, commission disclosure and clawbacks.
How we helpWe help you get authorised, onto lender panels and record commission properly, so it survives scrutiny later. Offering finance ↓
Most accountants cover the tax returns. We build the systems behind them.
Does any of this sound familiar?
Start with the hard questions.
We sold more units than last year. So why is there less in the bank?
Volume isn’t margin. Higher prep costs, longer days in stock and stocking interest can quietly eat the profit on every deal.
The accounts say we made a profit. It doesn’t feel like it.
A one-off gain, such as selling off old hire vehicles, can make a poor trading month look fine. We show you what’s underneath.
Prep costs keep creeping up, and nobody can say why.
If reconditioning isn’t booked to the vehicle it belongs to, you can’t price for it, and you can’t control it.
We’ve got vehicles that have been on the forecourt for months.
Every extra day costs interest, depreciation and space. Old stock rarely gets better with age.
The VAT bill is always a surprise.
Margin scheme units, qualifying cars and VAT-invoiced vans all behave differently. Without the right records, the return is guesswork.
Customers love the van, then walk away to “sort the money out”.
Without finance on the spot, larger dealers win the deal. Offering it needs authorisation, lenders and the right paperwork.
Your money isn’t in the bank. It’s parked on the forecourt.
The numbers that matter for dealers and garages
The few numbers you can genuinely influence, measure and improve.
Chassis profit: profit per unit, after everything
Chassis profit is the trade term for what the vehicle itself makes, before finance commission, warranties and other add-ons. It’s not the gap between buying and selling price. Reconditioning, transport, valeting, warranty and stocking interest all come off before you’ve made a penny.
Gross margin by department
Vehicle sales, workshop, parts and hire each earn very different margins. One combined figure hides which part of the business is carrying the rest.
Stock days and stock turn
How long the average vehicle sits before it sells. Most dealers should aim for 30 to 45 days, or turning the stock 8 to 12 times a year.
Stock ageing
Units over 60 and 90 days, named and valued every month, with a plan for each one before it becomes a write-down.
Reconditioning cost per unit
Tracked by vehicle and by source, so you can see which auctions, part-exchanges or suppliers bring in vehicles that cost too much to prepare.
Workshop labour recovery
Hours sold against hours paid. A busy workshop with a low labour rate or lots of unbilled time can still lose money.
Hire fleet utilisation
Days on hire against days available, and the true cost per vehicle, including depreciation, so you know when to grow the fleet and when to sell.
Finance penetration and commission
The share of sales that go out on finance, the commission earned and any clawbacks, recorded so you can prove how it was earned.
Cash and stocking-finance headroom
How much of your stocking line is used, what curtailments are coming up, and whether you can buy the stock you need next month.
Buying stock
You make your profit when you buy, not when you sell
Once you’ve paid too much for a vehicle, no amount of good selling gets that money back. You either cut the price and lose margin, or hold out and lose it in days on the forecourt. The best dealers work backwards from what a vehicle will really sell for, and set the most they’ll pay before they bid.
- Price it to sell first: the realistic retail price in your area today, not the hopeful one
- Allow for everything it will cost: preparation, transport, valeting, warranty and stocking interest
- Buy what sells for you. Your own stock days by make, model and age show what moves and what sits
- Check the history, the mileage, the service record and any outstanding finance before you commit
- Set a walk-away price at auction, and don’t over-allow on part-exchanges to win a deal
- Track profit by source, so you know which auctions, suppliers and part-exchanges really make you money
Illustration for a used car sold under the margin scheme. Pay £9,500 instead and that £1,500 profit falls to under £1,000.
Cash stuck in stock
How much of your money is parked on the forecourt?
For car and van dealers, a good stock turn is 8 to 12 times a year: selling and replacing your whole stock every 30 to 45 days. A dealer selling £3m of vehicles a year (at cost) and holding £655,000 of stock turns it only 4.6 times, so the average unit sits for about 80 days. We see this a lot when we take on a new client. Get that down to 45 days and around £285,000 comes back into the bank, plus almost £20,000 a year saved in stocking interest. That’s over £300,000 more in the bank in your first year. Try your own figures.
Illustration only. Stock days = average stock ÷ cost of vehicles sold × 365. Cash released = current average stock minus the stock needed at your target days. Interest saved assumes the released stock was funded by stocking finance at the rate shown. More money in the bank = cash released plus one year’s interest saved. Read more: What is a good car & van stock turnover ratio? · Stock days: don’t let your cash get stuck on the shelf · Stock turnover ratio & business efficiency
What a monthly report should show
The month looked profitable. It wasn’t.
A typical example from our monthly reviews. A van dealer with a workshop and a small hire fleet reported a profit of around £10,000 for the month. But £20,000 of that came from selling off old, fully depreciated hire vans. Take that one-off gain out and the trading month made a loss of about £10,000.
- Gross margin had slipped to under 20%, well below the 22–25% we’d look for in a mixed sales and workshop business
- Reconditioning costs had crept up and weren’t being charged to the vehicles they belonged to
- Fewer hire days and rising fleet costs had cut hire margins by ten points
- Fewer customers, each spending more, which looks fine until a few big ones go elsewhere

VAT on vehicles
The margin scheme, qualifying cars and vans: get each unit right
How much VAT you owe on a vehicle depends on its history. Most used cars are sold under the second-hand margin scheme, where VAT is due only on your profit: one-sixth of the margin at the standard rate. Make a loss on a unit and no VAT is due, but you can’t set that loss against the profit on another one. Each vehicle stands alone.
Vans and commercial vehicles are different. Most are bought from VAT-registered businesses on a VAT invoice, so you reclaim the VAT when you buy and charge 20% on the full selling price. Put a VAT-invoiced van through the margin scheme, or a margin scheme car through the full rate, and you’ll pay too little or far too much.
To use the margin scheme, you must
- Have bought the vehicle without VAT charged on the invoice, for example from a private seller or another dealer using the scheme
- Keep a stock book recording each vehicle, its purchase and its sale
- Hold a purchase invoice and issue a sales invoice with the details HMRC requires
- Work out the margin vehicle by vehicle. Global accounting isn’t allowed for vehicles
| Situation | Usual VAT treatment | What it means |
|---|---|---|
| Used car bought from a private seller, or from a dealer using the margin scheme | Margin scheme | VAT is one-sixth of your profit on that vehicle. No VAT shown on your sales invoice. |
| Qualifying car, for example ex-lease or ex-rental where the VAT was reclaimed when new | 20% on full price | Reclaim the VAT on purchase and charge it on the whole selling price. Business buyers can then reclaim it. |
| Van or commercial vehicle bought on a VAT invoice | 20% on full price | The normal VAT rules apply, and most trade buyers can reclaim the VAT you charge. |
| Van bought from a private seller | Margin scheme | The margin scheme can apply, as long as no VAT was charged when you bought it. |
| Reconditioning, parts and repairs before sale | Reclaim as normal | Under the margin scheme these can’t be added to the purchase price, but you reclaim the VAT on them in the usual way. |
Part-exchanges
Record the part-exchange at a realistic value. Over-allowing on a trade-in and inflating the price of the vehicle you sell simply moves profit, and VAT, from one deal to the next, and makes both margins meaningless.
Warranties, GAP and add-ons
Some products are VAT-exempt insurance, some are standard-rated services, and some must be sold separately from the vehicle. Get the split right and record any commission you earn on them.
Demonstrators, courtesy cars and staff use
Whether you can reclaim VAT on a car depends on how it’s used. Stock held for sale is one thing. A car that you or your staff can use privately is another, and it can also create a large benefit in kind. The car you or your employees take home ↓
Imports, exports and insurance work
Buying from or selling to Northern Ireland, the EU or further afield, and repair work paid by insurers, each have their own rules and paperwork. We make sure the evidence is in place before the deal, not after.
A general guide based on HMRC’s VAT Notice 718/1 on the margin scheme for vehicles. Every vehicle’s history is different, so talk to us about yours.
Offering customer finance
Finance sells vehicles. Get the compliance right first.
Most tradespeople and small businesses buying a van don’t have the cash upfront. Offering finance on the spot wins deals, lifts margins and earns commission. But arranging finance is regulated, and the rules on commission have never been under closer scrutiny.
- FCA authorisation for credit broking, with the right permissions, before you mention finance to a customer
- Lender panels: authorisation is only the licence to trade. Each lender has its own approval, and new brokers start with a narrow choice of rates
- Financial promotions in the showroom, online and in adverts that meet the FCA’s rules
- Commission disclosure that tells customers clearly how you’re paid, and records you can produce years later
- Clawbacks recorded and provided for, so early settlements don’t turn this year’s commission into next year’s loss
Read how we helped a van dealer get FCA authorisation and onto lender panels: William’s story →

Company cars & salary sacrifice
Electric cars are still one of the most tax-efficient benefits in the UK
For your own team, and as something to offer your business customers, salary sacrifice on an electric car saves far more than most people realise. The benefit in kind on a fully electric car is 4% of its list price in 2026/27 and 5% in 2027/28, compared with up to 37% on a petrol or diesel car.
The savings everyone gets
- Income tax and National Insurance saved on the salary given up
- The employer saves its own 15% National Insurance too
- Most employers can reclaim at least some of the VAT on the lease, and pass that saving on
- Companies buying a new zero-emission car outright can deduct 100% of the cost from profits, until April 2027
The savings people overlook
- Student loans: repayments are worked out on the lower, post-sacrifice salary, so graduates save more
- £60,000 to £80,000: lower pay can reduce or remove the High Income Child Benefit Charge
- Over £100,000: income is taxed at an effective 60% as the personal allowance is lost. Bringing pay back under £100,000 can also restore tax-free childcare and funded childcare hours
Rates for 2026/27. Salary sacrifice for petrol and diesel cars is taxed on the higher of the salary given up and the benefit in kind, so the savings mainly apply to electric and very low-emission cars. Everyone’s position is different, so get advice before signing up.
Growing beyond the forecourt
Most dealers grow by adding services. Each one needs its own numbers.
Workshop, MOTs & servicing
Steady income that isn’t tied to vehicle sales, but only if the labour rate covers the real cost of a technician’s hour.
What helpsAn hourly rate built from actual costs and target margin, and labour recovery tracked every month. Simon’s story →
Hire, leasing & recovery
Hire fleets need funding, earn on utilisation and lose value every month. Disposal profits can flatter a weak year.
What helpsProfit per vehicle on hire, depreciation that matches reality, and a clear rule on when to replace or sell.
Brokerage & fleet sales
Some of the UK’s fastest-growing companies are van brokers, built on business fleets, technology and service rather than a big forecourt.
What helpsSystems that scale: commission tracking, cash flow that keeps up with volume, and reporting your funders trust.
Electric vehicles
Higher purchase prices, uncertain residual values, battery health checks and charging equipment all change the numbers.
What helpsPricing and stock decisions based on real used-EV margins, and capital allowances claimed on chargers.
Acquisitions & exit
Buying another site or selling the business both depend on clean, believable numbers going back several years.
What helpsDue diligence, funding and valuations, and a business that’s ready to sell. Financial freedom & exit →
Questions to ask a motor trade accountant
Whoever you choose, ask them these. Here’s how we’d answer.
Have you worked with car and van dealers before?
Yes. Josef has worked inside dealerships and supports dealers, garages and hire firms today.
Do you understand the margin scheme and stocking finance?
It’s the starting point. We check VAT unit by unit and reconcile your stocking lines every month.
Can you report profit by department and by unit?
Yes. Vehicle sales, workshop, parts, hire and finance commission, each with its own margin.
How do you help with cash in quieter months?
A rolling 13-week forecast, stock days targets and a plan for seasonal dips before they arrive.
What controls will you put in place?
Bank, stocking and till reconciliations, stock counts and split duties, so no single person handles cash and the reporting.
Will you deal with HMRC and lenders for us?
Yes. We speak to HMRC, your stocking lenders and finance providers on your behalf.
Keep your best people, and keep payroll right
Good salespeople and skilled technicians are hard to find. How you pay and reward them matters as much as what you pay.
Payroll & employment
Weekly or monthly payroll with sales commission, bonuses and overtime handled correctly, payslips, RTI submissions to HMRC, starters and leavers, auto-enrolment pensions, and company car benefits reported properly. And our fees are tax deductible.
Our payroll services →Rewarding your team tax-efficiently
Commission and bonus schemes tied to profit per unit rather than volume alone, salary sacrifice cars, EMI share options for key people, and Employee Ownership Trusts if you plan to step back.
Ideas for rewarding your staff →Your Virtual Finance Office
A full finance team without the £240k salary bill
To grow properly, a dealer needs every one of these skills. Most can’t justify them all full-time, so a bookkeeper ends up covering FD work, or the owner ends up doing the stock book and VAT return late at night.
Our Virtual Finance Office gives you the whole team, often for less than the salary of one full-time junior. If you already have good people, we work with them and fill the gaps.
Average UK salaries, indeed.com.
Who we work with
Owner-managed motor businesses that want more than annual accounts and VAT.
Car & van dealers
Independent and franchised, retail and trade, dealing with the margin scheme, stocking finance, part-exchanges and customer finance.
Garages, workshops & bodyshops
Servicing, MOTs, repairs and accident work, where labour rates, parts margins and insurance work decide the profit.
Hire, leasing, brokers & recovery
Van and car hire, contract hire, vehicle brokers, haulage and recovery, where utilisation, funding and cost per mile matter most.
Virtual Finance Office
Bookkeeping, VAT, the stock book, payroll, payment runs and departmental management accounts. The foundations everything else is built on.
Find out more →Virtual Finance Director
Part-time finance leadership. Forecasting, cash, stocking finance, pricing strategy and a monthly board meeting.
Find out more →Financial freedom & exit
Build a more valuable business, plan your exit and protect your family if the unexpected happens.
See packages →Josef, founder of Blueski, has worked inside motor dealerships as well as construction, manufacturing and shopfitting firms. At one multi-site car dealership he spotted from the monthly figures that workshop cash sales were going missing, and put the controls in place to stop it. He has also helped a van dealer get FCA authorisation and onto lender panels to grow sales.
Questions dealers ask us
What does a motor trade accountant do that a general accountant doesn’t?
We treat a dealership as a dealership, not a shop. We get VAT right on every vehicle, keep the stock book, track profit per unit after reconditioning and stocking interest, report each department separately, manage stock days and stocking finance, and support you with customer finance and the FCA. So you know what each unit and each department is really making.
How does the VAT margin scheme work for used cars?
If you bought the car without VAT being charged, for example from a private seller or another dealer using the scheme, you can account for VAT on your margin only. The VAT is one-sixth of the difference between your buying and selling price. If you sell at a loss, no VAT is due, but each vehicle is worked out on its own, so a loss on one can’t reduce the VAT on another. You must keep a stock book and the right invoices.
Can I use the margin scheme for vans?
Only if no VAT was charged when you bought the van, for example from a private seller. Most vans are bought from VAT-registered businesses on a VAT invoice, so you reclaim the VAT on purchase and charge 20% on the full selling price. Using the wrong method on a van is one of the most common mistakes we see.
Can I add reconditioning costs to the purchase price under the margin scheme?
No. Under the margin scheme, the purchase price is what you paid for the vehicle. Reconditioning, parts and repairs can’t be added to it, but you can reclaim the VAT on those costs in the normal way. You should still charge them to each vehicle in your own records, so you know its true profit.
What is a qualifying car?
A car where VAT could be reclaimed when it was first bought, typically by a leasing company, a rental firm or a driving school. When you sell it on, you charge VAT at 20% on the full price rather than using the margin scheme, and you can reclaim the VAT you paid when you bought it. Most other used cars are not qualifying cars.
What is a good stock turnover for a car or van dealer?
Typically 8 to 12 times a year, which means selling and replacing your whole stock every 30 to 45 days. Work it out by dividing the cost of vehicles sold by your average stock value. Niche or specialist vehicles may turn more slowly but earn more per unit, so the right target depends on what you sell.
How should part-exchanges be recorded?
At a realistic value. If you over-allow on a trade-in and push up the price of the vehicle you sell, you move profit and VAT from one deal to the next, and both margins become meaningless. Under the margin scheme, the value you record for the part-exchange becomes its purchase price, so it matters when you sell it on too.
Do I need FCA authorisation to offer car finance?
Yes. Introducing customers to finance and arranging it is credit broking, a regulated activity, so you need FCA authorisation with the right permissions before you offer it. You then need approval from each lender you want to work with, compliant financial promotions and clear disclosure of how you’re paid. We helped one van dealer through every stage.
How does the motor finance commission redress scheme affect dealers?
The FCA’s scheme compensates customers for past commission arrangements on agreements going back to 2007. Lenders are responsible for paying redress, but they rely on dealers’ and brokers’ records, and some agreements allow costs to be passed back. Check your lender agreements, keep your commission records and talk to us about any potential exposure. The scheme has been challenged in the courts, so its details may still change.
Are electric company cars still tax-efficient?
Yes. The benefit in kind on a fully electric car is 4% of its list price in 2026/27 and 5% in 2027/28, far lower than a petrol or diesel car. Through salary sacrifice, employees also save income tax and National Insurance, and some save more again through lower student loan repayments, a smaller High Income Child Benefit Charge or keeping their income below £100,000.
Do you only work with dealers near Melton Mowbray?
No. We’re based in Melton Mowbray, Leicestershire, and work with motor businesses across the UK using cloud accounting software such as Xero, QuickBooks and Sage, alongside your dealer management system, and regular video calls. We’re happy to visit your site too.
How much does a motor trade accountant cost?
It depends on what you need, from VAT, bookkeeping and payroll to monthly departmental management accounts and a part-time finance director. After a free 30-minute call, we send you a fixed monthly fee, so there are no surprises.
Sell vehicles. Don’t let your stock sell you short.
Find out before it costs you.
Book a free 30-minute call with Josef. We’ll look at your latest figures and tell you what they’re not telling you. No charge, no obligation. Or get our free e-book below.
Free e-book
The 8 Numbers Every Business Should Know & Track
The key numbers that show whether your dealership is really making money, from gross profit and break-even to how fast your stock turns back into cash. Enter your details and we’ll email it to you straight away.
T: 01664 774041 · M: 07887 921705 · E: Sales@MrBlueski.co.uk
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