de minimis
The de minimis rule says some things are too small to bother with. We disagree — the small things in tax are usually where the money is.
One VAT return instead of four sounds like an obvious win. For some businesses it is; for others it quietly ties up cash. Here's how the scheme works and where it stops being a good idea.
Charity VAT is one of the trickiest corners of the system — a mix of exempt income, non-business activity and partial exemption that catches out organisations who assumed "charity" meant "no VAT to worry about."
Making Tax Digital for Income Tax started in April 2026. Being compliant for VAT doesn't make you compliant for Income Tax — they're separate systems, with their own thresholds and their own start dates.
Plenty of businesses and charities are still running a margin scheme or partial exemption on a desktop package or a spreadsheet because moving feels risky. With MTD tightening, here's how to switch without losing your audit trail.
The margin scheme isn't just for car dealers. Antiques, collectables, vintage clothing, used books — if you buy second-hand and sell on, it can cut your VAT bill. For high-volume, low-value stock there's an even simpler version.
If you're VAT-registered and you sell second-hand vehicles, charging 20% on the full sale price can hand HMRC money you never collected. The margin scheme fixes that — but only if your records are right.
If your business has any exempt income at all — residential lettings, certain types of training, financial services, some healthcare — you might be partially exempt for VAT. The de minimis test is the rule that determines whether the partial-exemption complexity actually applies to you, or whether HMRC will let you off and recover all your input VAT anyway.
The Tour Operators Margin Scheme is the second-most awkward UK VAT regime to handle in cloud accounting software, after partial exemption. It's also unusual in that — unlike partial exemption — the affected businesses almost always know they're affected. They're tour operators. They've heard of TOMS. What they may not know is how thoroughly their accounting platform fails to support it.
The annual adjustment is the part of partial exemption that catches even careful practitioners out. By the time you reach year-end, the figures supporting your provisional quarterly calculations are anywhere between three and twelve months stale.
There's a curious gap in the UK accounting software market. The four major small-and-mid-market platforms collectively serve more than 90% of UK SMEs. None of them automate partial exemption. This isn't a feature roadmap miss; it's an architectural decision, and HMRC has quietly accommodated it for years.
The 1/6 fraction sits at the heart of every UK margin scheme calculation. Here's what it means and why it has nothing to do with 20%.
A new editorial corner from the team at onesixth — short, sharp writing on margin VAT, TOMS, and the unloved corners of UK indirect tax.
New posts, occasionally. No marketing, no nonsense.