VAT partial exemption applies to a business that makes both taxable and VAT-exempt supplies, restricting how much input VAT on general overheads it can recover.
The standard method and the de minimis limit
Businesses apportion residual input VAT using an agreed method, most commonly based on the ratio of taxable to total supplies. If exempt input VAT falls under the de minimis limits, it can usually be reclaimed in full despite the exempt activity.
Tax rules depend on individual circumstances and can change. This glossary is general information rather than personalised tax advice.