Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Input tax definition

What does Input tax mean? Input tax is the vat a VAT‑registered business incurs on purchases, imports and certain self‑assessed charges, which it may deduct from its output tax on its VAT return if the costs are used for the business’s taxable activities. In the UK (including the Isle of Man), input tax is defined in legislation: Value Added Tax Act 1994, section 24(1). It covers VAT on supplies to the taxable person, import VAT and (where applicable) VAT on intra‑EU acquisitions, provided the goods or services are used, or to be used, for the purposes of any business carried on or to...

UK VAT partial exemption: input tax recovery, standard and special methods, de minimis, annual adjustments, overrides, VAT groups, non-business activities and CGS

Published by a LexisNexis Tax expert

Practice notes

Businesses are partially exempt for VAT purposes if they make both taxable and exempt supplies.

Businesses that make both taxable and exempt supplies are treated as partially exempt for VAT purposes. For a description of the types of supplies that are exempt from VAT, see Practice Note: Exemptions from VAT. This Practice Note sets out:

when a partly exempt business may reclaim Input tax
the standard method for determining recoverable input tax
the De minimis limits governing input tax recovery
how to perform the annual adjustment
the operation of the standard method override
an overview of special methods for calculating recoverable input tax
the special method override
the effect of non-business activities on partial exemption
how the partial exemption Rules apply to VAT groups

For guidance on reclaiming VAT on professional fees (of accountants, lawyers and other advisers) arising on business sales and acquisitions, share sales and acquisitions, corporate restructurings, and share issues, see Practice Note: VAT recovery on corporate transactions. This Practice Note also refers to EU case law. The UK ceased to be an EU Member State on 31 January 2020...

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Web page updated on 22/05/2026

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