Partial exemption: de minimis limits

Two simplified approaches have been introduced from April to augment the existing test. The simplest test of all will be if total input tax incurred by a taxable person is less than £625 a month on average; then, as long as 50% or less of the turnover is exempt, the de minimis test is passed. If that is failed, then the next test is to strip out all input tax directly and solely attributable to taxable supplies. If the remainder is less than £625 a month on average, then as long as 50% or less of the turnover is exempt, that de minimis test is passed. If you fail that, you have to use the traditional test.