De minimis — often misspelt "di minimus" — is shorthand for the legal maxim that the law does not concern itself with trifles, and UK tax is full of the thresholds that put the principle into numbers: the lines below which VAT ignores your exempt activity, benefits escape tax, and whole compliance regimes switch off. Knowing where the lines sit is free money and avoided admin; drifting across one unknowingly is how tidy businesses acquire messy problems. Here are the de minimis limits that matter most in practice — and the one now being abolished outright.
The VAT partial exemption de minimis: the big one
The most valuable de minimis in the system belongs to partially exempt businesses. Normally, input VAT attributable to exempt activities is irrecoverable — but if your exempt input tax is no more than £625 a month on average (£7,500 a year) and no more than half your total input tax, the de minimis rule lets you recover all of it. A trading company with a little rental income, a firm with some exempt commission — businesses like these recover thousands a year purely by being under the line, and lose it entirely the year they drift over. The rule is tested provisionally in-year and definitively in the annual adjustment, which makes monitoring it a standing item wherever exempt income exists: near the boundary, the timing of costs and the structuring of exempt sidelines are genuine planning levers. (The mechanics live alongside the partial exemption methods our VAT specialists run.)
The employment and benefits lines
Payroll carries its own family of trifles, each with sharp edges: trivial benefits at £50 or less per benefit (not cash, not a reward, not contractual — with a £300 annual cap for close-company directors), the exemption that makes staff gestures tax-free until someone puts £55 on the card; the £100 parental settlement rule, under which a minor child's investment income from a parent's gifts is taxed on the parent once it passes £100 — a cliff, not an allowance, as our trusts guide explains; and the £10,000 beneficial loan threshold below which an employee's (or director's) interest-free loan generates no benefit charge — and above which the whole loan does, the trap that catches drifting directors' loan accounts. Adjacent and often confused: the £1,000 trading and property allowances for individuals — genuine de minimis exemptions for small side income, and the reason a car-boot habit is not a tax problem until it becomes a business.
The corporate switches
Several whole regimes turn on de minimis gates — and they are not all built the same way, which is where costly assumptions creep in. The corporate interest restriction leaves alone groups with net UK interest under £2 million a year, and above that the £2 million acts as a floor under the group's interest capacity: £2.1 million of net interest with no greater allowance means a £100,000 disallowance, not £2.1 million. The CFC rules' low-profits exemption needs two conditions together — profits no more than £500,000, and non-trading income within that no more than £50,000. Trusts have a £500 income de minimis and a £1,500 CGT exemption, both divided among a settlor's settlements and varying for certain trust types. The pattern to respect: some of these are genuine cliff-edges (the £500 trust income limit, the £50 trivial benefit) where crossing the line taxes the whole amount, while others simply cap a relief — so "we're roughly under it" is a monitoring obligation either way, and which kind you are dealing with decides how much the drift costs.
The one being abolished
One long-standing de minimis line is going altogether. The £135 customs relief on low-value imports — the rule that let small consignments enter duty-free, and the foundation of the overseas-parcel retail model — is being abolished: announced at the last Budget, draft legislation published in mid-2026, duty applying to low-value imports by March 2029 at the latest (the VAT side — point-of-sale VAT on ≤£135 consignments — continues for now, with changes floated but unconfirmed). Importers and marketplace sellers built on the relief should model the post-relief landed cost this year, not in 2029. The broader lesson of recent years — MDR abolished, the FHL regime gone, the Employment Allowance's £100,000 cap removed — is that thresholds and reliefs move at Budget speed, which is precisely why this page carries dates.
Managing the trifles
The practical routine: list which de minimis limits your business actually relies on (most rely on two or three without knowing), assign each a number that gets checked at year-end — average monthly exempt input tax, net interest expense, benefit values — and treat approaching a line as a planning trigger while options still exist on both sides of it. Acumon builds exactly this into compliance cycles across VAT, corporation tax and employment tax — because the law may not concern itself with trifles, but HMRC's systems concern themselves greatly with businesses that miscounted them.