VAT Partial Exemption Calculator
Calculate recoverable input VAT with the standard method: taxable/exempt attribution, residual apportionment (rounded up) and the de minimis test.
Data verified · July 2026
When am I partially exempt?
When you make both taxable and exempt supplies (e.g. financial services, insurance, letting residential property) — input VAT linked to exempt supplies is normally irrecoverable.
Source: HMRC — Partial exemption (VAT Notice 706, gov.uk/guidance/partial-exemption-vat-notice-706). · updated 2026
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Everything about VAT Partial Exemption Calculator
📋Overview+
Applies the standard partial exemption method (VAT Notice 706): input VAT directly attributable to taxable supplies is recoverable, exempt-attributable VAT is not, and residual VAT is split by the taxable turnover ratio (rounded up to a whole percent) — unless the de minimis test (£625/month AND ≤50% of input VAT) makes all exempt input VAT recoverable.
💡 Best practices
- The ratio rounds UP — £850,001 of taxable turnover out of £1m gives 86%, not 85%.
- An annual adjustment recalculates the year as a whole and corrects the quarterly provisional recoveries.
- Special methods (sector, floorspace…) need HMRC approval when the standard method distorts recovery.
🔢 Concrete example
£800,000 taxable / £200,000 exempt turnover with £10,000 residual VAT: 80% recovery (£8,000). Exempt input VAT totals £6,000 (£500/month, 40% of the total) — de minimis passes, everything is recoverable.
📖User guide+
How to use this calculator
- 1
Enter annual taxable and exempt turnover.
- 2
Split input VAT: taxable-attributable, exempt-attributable and residual.
- 3
Read the recovery ratio, the de minimis verdict and the recoverable total.
📚Glossary+
- Residual input VAT
- VAT on costs serving both activities (overheads, rent, professional fees) — apportioned by the taxable share of turnover, rounded up to the nearest whole percent.
- De minimis
- If exempt input VAT is at most £625/month on average (£7,500/year) AND no more than half of total input VAT, you recover it all.
ℹ️Sources & updates+
Last data update
July 5, 2026
Sources and references
HMRC — Partial exemption (VAT Notice 706, gov.uk/guidance/partial-exemption-vat-notice-706).
The data in this calculator is updated regularly to reflect the latest official rates. When in doubt, consult the official sources listed above.
FAQ — VAT Partial Exemption Calculator
When am I partially exempt?+
When you make both taxable and exempt supplies (e.g. financial services, insurance, letting residential property) — input VAT linked to exempt supplies is normally irrecoverable.
How is residual VAT apportioned?+
By the standard method: taxable turnover divided by total turnover, rounded up to a whole percentage (when average residual input tax is £400,000/month or less), applied to the residual pot.
What is the de minimis limit?+
Exempt input VAT of no more than £625 per month on average (£7,500 a year) AND no more than 50% of all input VAT — pass both and you recover it in full.