Sage uses the following codes for VAT:
T1 - standard rate VAT
T2 - exempt (eg. stamps, insurance, aire fares, bank charges, financial services
T4 - EC Sales
T5 - lower rate VAT (eg. electricity, gas, women’s sanitary products)
T9 - not involving VAT/outside scope of VAT (eg. suppliers that are not registered for VAT, road fund licences ie. car [...]
There are some things that are completely outside the scope of VAT. These include donations to charity, personal activies outside your business, MOT testing and tolls .
You do not charge or reclaim VAT on transactions that are outside the scope of VAT.
Generally, electricity and gas have a reduced VAT rate (5% at the time of writing). Children’s car seats, giving up smoking aids and sanitary products also have a reduced VAT rate.
Some goods and services are zero rated for VAT. These include books, newspapers, childrens clothing and children’s footwear.
Suppliers of zero-rated VAT goods/services can register for VAT and reclaim the VAT on purchases.
Some supplies are exempt from VAT, such as insurance, finance and education. If you ONLY supply exempt goods/services, you will be exempt from VAT and will be unable to register for VAT. This also means that you will be unable to reclaim any VAT from your purchases.
If part of your supplies are exempt, you will still be [...]
