Accounting services
Vehicle stock accounting and stocking finance
Motor Trade Accounting helps car, van and motorcycle dealers across the UK get vehicle stock records, valuations and stocking finance accounting right. See exactly what your stock is worth and what it is costing you to hold it.
Your stock is your biggest asset and your biggest risk
For most dealers, vehicles in stock are the largest item on the balance sheet and the main use of cash. Every car on the forecourt has been paid for, either from your own money or through a stocking plan, and it earns nothing until it is sold. Getting the accounting for that stock right affects your profit, your tax, your VAT and your relationship with your finance provider.
Stock accounting starts with records. Each vehicle needs a clear history: who it was bought from, what it cost, what was spent preparing it, when it was sold and for how much. For used vehicles sold under the VAT Margin Scheme, HMRC expects a stock book and supporting invoices that show exactly that. The same records feed your year-end stock valuation, where stock is valued at the lower of what it cost and what it can realistically be sold for.
Stocking finance, also called floor-plan finance, adds another layer. Interest, fees and curtailment payments have to be recorded properly, and the facility needs to be reconciled against the vehicles you actually hold. A specialist motor trade accountant brings these pieces together so you can see your stock position, the true cost of holding each vehicle and the information your lender is likely to ask for.
What stock accounting support can include
Support covers the records, the valuation and the finance that sits behind your stock.
- Stock book set-up and reviewMaking sure each vehicle's purchase, preparation and sale details are recorded in the way the margin scheme requires.
- Preparation and reconditioning costsDeciding which costs are added to a vehicle's stock value and which are treated as overheads, applied consistently.
- Year-end stock valuationValuing stock at the lower of cost and net realisable value, with sensible write-downs for vehicles that will sell below cost.
- Stocking plan reconciliationMatching the vehicles on your finance statements to the vehicles you hold and the balances in your books.
- Interest and curtailment accountingRecording facility interest, fees and curtailment payments correctly so profit and cash are both accurate.
- Stock age and turn reportingRegular reports on days in stock and stock turn, so slow-moving vehicles are spotted early.
- Sale or return and part-exchangesTreating consignment vehicles and part-exchanges correctly in both stock and VAT records.
What to plan for good stock accounting
A few decisions made early keep stock records reliable throughout the year.
A single source of truth
Decide whether your dealer management system, a spreadsheet or your accounting software holds the master stock list, and keep the others in line with it.
A cost policy
Agree which preparation costs, such as valeting, repairs, MOT and transport, are added to each vehicle so margins are measured consistently.
Regular stock checks
Physical checks of vehicles against the stock list, including cars at bodyshops or auctions, catch errors before the year end.
Facility terms
Know your stocking plan's limits, interest basis and curtailment schedule so you can plan purchases around them.
Good to know about vehicle stock
Negative margins carry no VAT relief
Under the margin scheme, a vehicle sold for less than it cost has no VAT to pay, but that loss cannot be set against VAT due on other sales.
Ageing stock costs more than it seems
Interest, depreciation in value and the space it takes up all add to the cost of a vehicle that sits too long.
Lenders audit stock
Stocking finance providers commonly carry out stock audits, checking that financed vehicles are on site or properly accounted for.
Demonstrators and courtesy cars need care
Vehicles used in the business as well as held for sale can have different VAT and benefit-in-kind consequences. Take advice on how yours are treated.
How it works
- 1
Send an enquiry
Tell us what you sell, how much stock you carry and how it is financed.
- 2
Review your records
A specialist motor trade accountant looks at your stock book, dealer system and finance statements.
- 3
Fix and set up
Gaps in records are closed and a routine is agreed for recording costs, reconciling finance and checking stock.
- 4
Report regularly
Stock values, age and finance balances are reported on an agreed timetable alongside your other figures.
Questions about vehicle stock accounting
How should used vehicle stock be valued at the year end?
Each vehicle is valued at the lower of its cost and its net realisable value, which is the expected selling price less the costs of getting it sold.
Should preparation costs be added to the cost of a car?
Costs directly incurred to get a specific vehicle ready for sale are commonly added to its cost, provided the policy is applied consistently. Your accountant can agree the right approach with you.
What is a curtailment payment?
It is a scheduled repayment that some stocking plans require on a vehicle that has been financed for a set period, even if it has not yet sold.
Do I need a stock book if I use a dealer management system?
You need records that contain the information HMRC requires for the margin scheme. A dealer system can serve as the stock book if it holds all of that information.
How do I know if I am carrying too much stock?
Stock turn and days in stock, compared with your sales rate and cash position, show whether stock levels are working for you.
Who will help me with this?
Your enquiry goes to a qualified accountant who works with motor trade businesses and understands dealer stock and stocking finance.
Take control of your vehicle stock
Tell us how you buy, finance and sell your stock and a specialist motor trade accountant will be in touch.