Partial exemption de minimis limit

Produced by Tolley
Partial exemption de minimis limit

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Partial exemption de minimis limit
  • Partial exemption de minimis limit
  • Main de minimis test
  • Simplified de minimis tests
  • Test 1
  • Test 2
  • Annual adjustment and the de minimis limit
  • Annual de minimis test
  • Standard method override and the de minimis limit
  • Capital goods scheme & the de minimis limit

This guidance note provides an overview of the partial exemption de minimis rules. This note should be read in conjunction with the Partial exemption overview guidance note.

If a business incurs an insignificant amount of input tax which is associated with exempt supplies (exempt input tax), it may be possible for all of the VAT to be recovered. However, please note that if a business has elected to use the ‘combined’ partial exemption method, then it cannot use the de minimis limit to recover VAT.

The de minimis test rules explained below can only be applied to exempt input tax. If the business incurs VAT on non-business or private expenses, this VAT cannot normally be recovered. See the Business and non-business guidance note for more information.

Main de minimis test

Since April 2010, there have been two simplified de minimis tests which supplement the main test. These are explained below.

In addition for an interactive illustration of how the tests are to be applied see our interactive flowchart. Alternatively, for a static pdf version, see the Flowchart ― De minimis tests.

Under the main test, a business can recover all of the VAT incurred if the total value of the exempt input tax is no more than:

  1. £625 per month on average

  2. 50% of the total input tax in the relevant period

The total value of the exempt input tax must include the following:

  1. input tax that is directly as

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