VAT & Buyer's Premium at UK Auctions Explained (2026)

The single biggest mistake new buyers make at UK government and surplus auctions is bidding on the hammer price alone. By the time the invoice arrives, two extra charges — buyer's premium and VAT — can add 30% or more to what you actually pay. Understanding them before you bid is the difference between a bargain and a nasty surprise.

This guide explains exactly how both work in the UK in 2026, with worked examples.

The Hammer Price Is Not Your Total

Your true cost at a UK auction is:

Hammer price + buyer's premium (+ VAT on the premium) + any VAT on the lot + collection/transport.

Get into the habit of calculating that full figure before you place a bid, and making it your walk-away limit.

Buyer's Premium

The buyer's premium is a fee the auction house charges the winning bidder, on top of the hammer price. It's how commercial auctioneers earn their margin.

• Rates vary by auctioneer and lot type, but **roughly 10–20% of the hammer price** is typical at the auction houses handling UK government surplus.
• **VAT is normally charged on the premium itself** at 20%, even when it isn't charged on the lot. So a 15% premium effectively costs 18% once VAT on the premium is added.
• Some online-only sales and platforms publish their premium clearly in the lot terms — always read it before bidding.

• Premium: £750
• VAT on premium (20%): £150
• Premium total: £900

VAT on the Lot Itself

This is where UK auctions get genuinely confusing, because there are two completely different VAT treatments, and the lot will tell you which one applies.

"Plus VAT" lots

Many government, business and ex-fleet lots are sold plus VAT, meaning 20% VAT is added to the hammer price.

• A £10,000 winning bid on a plus-VAT lot becomes **£12,000** before any premium.
• **VAT-registered businesses can usually reclaim** this VAT, so the real cost to them is closer to the net figure.
• **Private (non-registered) buyers cannot reclaim it** — the VAT is a genuine added cost.

If you're a private buyer, factor the full 20% into your maths. If you're a VAT-registered business buying for business use, you can typically recover it on your VAT return — but keep the VAT invoice.

VAT margin scheme lots

Many second-hand goods are instead sold under the VAT margin scheme (and the related auctioneers' scheme).

• Under the margin scheme, VAT is charged only on the auctioneer's or seller's **margin**, not on the full price.
• Crucially, **VAT is not shown separately** on a margin-scheme invoice — so you won't see a "+VAT" line, and a VAT-registered buyer generally cannot reclaim input VAT on the purchase.
• This is common for used consumer goods, jewellery and some vehicles.

The practical upshot: a margin-scheme lot usually has no visible VAT to add to your bid, whereas a "plus VAT" lot does. Always check the lot's stated VAT status.

Putting It Together — Worked Examples

• Hammer price: £6,000
• VAT on lot (20%): £1,200
• Buyer's premium (15%): £900
• VAT on premium (20%): £180
• **Total payable: £8,280** (van that "sold for £6,000")

• Hammer price: £6,000
• VAT on lot (20%): £1,200 *(reclaimable)*
• Buyer's premium (15%): £900
• VAT on premium (20%): £180 *(reclaimable)*
• **Net cost after reclaiming VAT: ~£6,900**

• Hammer price: £400
• VAT on lot: none shown (margin scheme)
• Buyer's premium (20%): £80
• VAT on premium (20%): £16
• **Total payable: £496**

The same headline strategy applies whatever the scheme: read the VAT status, add the premium and its VAT, and only then decide your maximum bid.

Tips to Avoid VAT and Premium Surprises

Read the lot's VAT status every single time. "Plus VAT", "VAT margin scheme" and "no VAT" mean very different totals.

Find the premium rate before bidding. It's in the auction's terms and conditions; don't assume it matches another sale.

Remember VAT applies to the premium too. Even a "no VAT" lot usually carries VAT on the buyer's premium.

Keep your VAT invoice if you're a business. You'll need it to reclaim VAT on plus-VAT lots.

Don't forget collection. Everything is collection-only; transport is a real cost on top of premium and VAT.

Frequently Asked Questions

How much is VAT at UK auctions?

UK VAT is 20%. On "plus VAT" lots, 20% is added to the hammer price — a £10,000 bid becomes £12,000. VAT is also normally charged at 20% on the buyer's premium. Some second-hand goods are sold under the VAT margin scheme, where VAT applies only to the seller's margin and isn't shown separately on the invoice.

What does "plus VAT" mean at an auction?

It means 20% VAT will be added to your hammer price. A £10,000 winning bid on a "plus VAT" lot costs £12,000 before the buyer's premium. VAT-registered businesses can usually reclaim this VAT; private buyers cannot, so they should budget for the full 20% on top of their bid.

How much is the buyer's premium at UK government auctions?

It varies by auction house and lot, but roughly 10–20% of the hammer price is typical, and VAT at 20% is normally charged on the premium itself. Always check the specific auction's terms and conditions, because rates and VAT treatment differ between auctioneers and lot types.

Can I reclaim VAT on an auction purchase?

If you're a VAT-registered business buying for business use, you can usually reclaim the VAT on a "plus VAT" lot and on the premium, provided you keep the VAT invoice. You generally cannot reclaim VAT on margin-scheme lots, because the VAT isn't shown separately. Private buyers cannot reclaim VAT at all.

What is the VAT margin scheme?

The VAT margin scheme is a way of charging VAT on certain second-hand goods only on the seller's or auctioneer's profit margin, rather than the full selling price. The VAT isn't itemised separately on the invoice, so there's no visible "+VAT" to add — but a VAT-registered buyer generally can't reclaim input VAT on that purchase.

The Bottom Line

UK auction maths is simple once you know the rule: hammer price, plus the buyer's premium and its VAT, plus any VAT on the lot, plus transport. Work that total out before you bid and make it your limit. GovAuctions helps you find the right lots across UK government auctioneers — but always confirm the premium and VAT status on the original auctioneer's terms before you commit.