Here is a beginners guide on which VAT rate to use when adding expenses on Quickbooks.
For a more detailed guidance on VAT rates please see HMRC's website, VAT rates on different goods and services.
20% S (20%)
If the supplier is VAT registered they will usually charge standard rate VAT. Examples include:
- Materials & tools
- Printing & stationery
- Car repair & service
- Accountancy fees
Always check the invoice to see if the supplier has charged VAT or not as if they are not VAT registered there will be no VAT to reclaim and the transaction will be classed as exempt.
Zero-rated means that the goods are still VAT-taxable but the rate of VAT you must charge your customers is 0%. You still have to report them on your VAT Return. Examples include:
- Public transportation (train, bus, flights)
- Books and newspapers
Exempt goods or services are expenses that can’t have VAT charged on them. Examples of exempt items include:
- Postage stamps
- Bank charges
- Items that would have been standard rated but the supplier is not VAT registered
Also known as outside the scope of VAT, using the tax code no VAT records the transaction for account purposes but doesn't need to be entered on your VAT Return. Examples of items outside the scope of VAT include:
- Wages and salaries
- Taxes paid to HMRC (PAYE, VAT, CIS, Corporation Tax)