Home/Tax Terminology Index/Input tax

Input tax definition

/ˈɪnpʊt/ /taks/

tax

What does Input tax mean?

Input tax is the VAT which a VAT registered business incurs on its business costs. It can generally be set-off against the output tax which the business charges on its sales, the net amount being remitted to HMRC along with the VAT return. Thus if the business charges output tax of £2000 in a VAT period, and incurs £1300 input tax on its purchases, the VAT return will show a net liability of £700 and that is the amount to be remitted to HMRC.

Certain input tax is ‘blocked, ie it may not be set-off against output tax. Examples are:

- VAT incurred on the purchase of a motor car, unless it is intended to be used wholly for business purposes, or as a taxi, for self-drive hire, or for driving instruction

- VAT incurred on the purchase of certain goods installed in new or converted buildings

- VAT incurred on purchases which are attributable to the making of exempt supplies, unless the VAT involved is de minimis.

Webinars

Practical Tax Guidance Linkedin for Accountants Exam Training

There’s no margin for error.
Think Tax.
Think Tolley.

TolleyGuidance gives you direct access to critical, comprehensive and up-to-date tax information and expertise you can rely on.

Take a free trial

Glossary terms:

Jump to letter down arrow icon

Annual investment allowance

Balancing allowance Balancing charge Bare trust Benefits in kind Brexit Business asset disposal relief Business property relief (BPR)

Capital allowances Cash accounting scheme Collective redundancy Company residence Connected company Convertible securities Corporate capital losses Corporate interest restriction (CIR) Corporate trading losses Corporation Tax CT61

DAC6: reportable cross-border arrangements De minimis Deferred consideration Diverted profits tax Dividend tax Double tax relief (DTR)

EC sales list EMI scheme Enterprise Investment Scheme (EIS) Enterprise Management Incentives (EMI) Entrepreneurs' relief Exports

Gift aid Global mobility and UK tax residence Gross interest Group relief

Imports Incorporation Incorporation relief Individual residence Input tax Input Tax/Capital Goods Scheme Input Tax/Partial Exemption Integral features Intrastat IPDI (Immediate post-death interest) IR35

Loan notes Loan relationships

Mini One Stop Shop

Non-resident capital gains tax (NRCGT)

Off-payroll working Option to tax Output tax Overpayment relief

Patent box Place of supply Property income for companies Property income for individuals Purchase of own shares

Registration and deregistration Remittance Remittance basis Research & Development Relief (R&D) Residence nil rate band (RNRB) Residual input tax Reverse charge Reversionary interest Rollover relief

Scale charges Seed Enterprise Investment Scheme (SEIS) Self-billing Settlor Share for share exchange Share incentive plan Stamp Duty Reserve Tax Stamp taxes Substantial Shareholding Exemption (SSE)

Tax relief Tax relief on pension contributions Taxable benefit Termination payments The potentially exempt transfer (PET) Transactions in securities (TiS) Transactions in UK land Transfer of a going concern (TOGC) Transfer of assets abroad Transfer pricing TWDV (Tax written down value)

UK continental shelf Underlying tax

Vulnerable persons trust

Withholding Tax (WHT)

Tax Guidance

Input tax definition

What does Input tax mean?

Related content

Webinars

Related documents:

Glossary terms:

Related documents:

Glossary terms:

Popular documents

Indexation allowance and rebasing

Maintenance payments

Use of home as office

Conditions for business asset disposal relief