VAT codes

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What are the VAT Codes and which one should you use?

Sage sets the standard UK and EC VAT Rates automatically for you, so this section assumes you have not altered your VAT codes.

This table shows the standard codes

VAT Code    UK  Ireland
T0 Zero Rated 0% Zero Rated 0%
T1 Standard Rate 17.5% Standard Rate 21%
T2 Exempt Exempt
T3 Not set at installation however, commonly used for Reduced Rate 5% Reduced Rate 13.5%
T4 Sales to EEC Vat Reg Customers 0% Sales to EEC Vat Reg Customers 0%
T5    
T6    
T7 Zero Rated purchases from EEC Zero Rated purchases from EEC
T8 Standard/reduced rate Purchases from EEC Standard/reduced rate Purchases from EEC
T9 Transactions outside the scope of VAT Transactions outside the scope of VAT
  • T0 ZERO Rated (items such as food and books)
  • T1 Standard Rated (most items are standard rated)
  • T2 Exempt (some travel and postage is exempt as are trades-people who have elected not to register for VAT) Section 29 of the Vat guide give more detail. (Telling the difference between T2 and T2 can be a little tricky, on the purchases an invoice from an exempt supplier will not normally have a VAT registration number a zero rated item will show )
  • T3 Reduced Rate (this is RARE it applies to some health and some energy products)
  • T4 Sales to EEC Customers at 0% (note: you must have the VAT registration number of you customer, otherwise you must treat them like a UK customer)
  • T7 0% Rated EEC transactions, these are transactions where your EEC based supplier has not charged VAT
  • T8 These are transactions where your EEC based supplier has charged VAT
  • T9 This code is used for sales and purchases outside of the EEC as well as things that are outside the scope of VAT such as Wages, transferring funds from one bank account to another

Depending on the tax code used, items are included as part of your turnover and the VAT element is separated into the separate categories for the VAT return.