This article specifically covers bill split for partial exemption VAT. For general bill split functionality, see the following guides: Bill Split Rules Guide and Supplier-level Bill Split.
Understanding partial exemption VAT invoices in Datamolino
Businesses with partial exemption VAT status can only reclaim a percentage of their input VAT. Datamolino can automate this using bill split rules, which automatically split each invoice into reclaimable and non-reclaimable portions based on business's recovery rate.
Choosing between supplier-level and generic rules
👉 Which type of rule should I use?
Use supplier-level bill split when you consistently process invoices from the same suppliers with partial exemption treatment. The rule applies automatically to every invoice from that supplier, eliminating manual work.
Use generic bill split rules when you need flexibility to apply partial exemption treatment to various suppliers or when you only occasionally process partial exemption invoices.
Setting up supplier-level bill split
👉 How do I apply this to a specific supplier?
You can set up supplier-level bill split from within any document from that supplier. Once configured, the rule applies automatically to all future invoices from that supplier.
Open a document from the supplier
Click Automation inside the document detail
Click Line Item Automation - Bill Split Rules
Add Percentage Amount Split - Add two lines (example uses 71.70% recovery rate)
Line 1: 71.70%with ledger account and the actual VAT rate on invoices (e.g. 20% VAT) - reclaimable portion
Line 2: 28.30% with ledger account and no VAT - non reclaimable portion
The bill split percentage must match your business's partial exemption recovery rate. If your recovery rate changes after an annual adjustment, update the bill split rule percentage accordingly.
Setting up generic bill split rules
👉 What if I need this for multiple suppliers?
Generic bill split rules can be applied to any invoice by selecting them from the Bill Split Rules list when processing a document. You create the rule once, then manually select it each time you need it.
Click Bill Split inside the document detail
Click Create New Rule
Add Percentage Amount - Add two lines (example uses 71.70% recovery rate)
Line 1: 71.70%with ledger account and the actual VAT rate on invoices (e.g. 20% VAT) - reclaimable portion
Line 2: 28.30% with ledger account and no VAT - non reclaimable portion
Add a Rule name
Save Rule & Apply
The next time you process an invoice, the rule appears inside the Bill Split button for manual selection.
Practical Example - How bill split calculates partial exemption
Once configured, Datamolino automatically splits every invoice without manual intervention.
Example with 71.70% recovery rate:
For a £12,000 invoice (£10,000 NET + £2,000 VAT):
Datamolino automatically creates:
Line 1 (71.70%): £7,170 net + £1,434 VAT (reclaimable)
Line 2 (28.30%): £3,396 net + £0 VAT (non-reclaimable)
This gives you:
£1,434 reclaimable VAT (71.70% of the original £2,000)
£10,566 total expense (original net + non-reclaimable VAT)