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UK legislation

General

Where goods and services are used or to be used partly for the purposes of a business carried on or to be carried on and partly for non-business purposes, the tax arising may be apportioned so that only so much as is referable to the business purposes is counted as input tax¹. However, the intention to use goods and services for non-business purposes may be disregarded if the degree of use envisaged is so trivial as to be insignificant².

The remaining tax, 'non-business VAT', is treated, with effect from 1 January 2011, as input tax only to the extent provided for in regulations³. These regulations⁴ provide that fluctuations in the business/non-business use of certain assets may be adjusted under the capital goods scheme provisions (see V3.470).

For an alternative to apportionment, see under 'EU position' below.

The legislation does not provide any statutory basis of apportionment. A tribunal has considered that the word 'apportionment' necessarily implies a fair division of something.