Sage 50 Accounts VAT Tax Codes 2022

Looking for the Sage VAT tax codes to use in 2022? You’ve come to the right place.

Sage software uses tax codes to categorise transactions so that you can complete your VAT return correctly. Many transactions will use the same VAT code each year, but changes to legislation or events like Brexit often mean that new tax codes are added.

We’ve rounded up the VAT tax codes you’ll need to use for 2022 below. You can also find the tax codes for the previous year in our 2021 VAT tax codes article.

If you need to boost your confidence when using Sage 50 Accounts, our training options will help. With 1-2-1 training, online courses, and self-study manuals we have options to suit everybody.

New Import Tax Codes

There are new tax codes available in Sage 50cloud Accounts to help you record EU and non-EU imports following Brexit legislation. After the UK’s departure from the EU, all imports and exports must now be treated the same for VAT purposes.

The tax codes to deal with Brexit have been in place since 2017 and range from T14 to T19. Check below to make sure you’re using the right ones.

• T14 – Import of goods – No VAT
• T15 – Purchase of services from ROW – Reverse charge
• T16 – Purchase of services from ROW – No VAT
• T17 – Import of goods – Under import reverse charge threshold
• T18 – Import of goods – Postponed VAT
• T19 – Import of goods – VAT no postponed

For more information on the import tax codes in Sage 50cloud Accounts here’s a more detailed article from Sage.

Zero-rated Goods and Services 0% – TO

The TO tax code is for use with zero-rated transactions such as

• Most foods
• Children’s clothing
• Books & Newspapers
• Construction of new housing
• Passenger transport
• Medicines on prescription

Standard rated Goods and Services, 20%- T1

The tax code T1 is to be used with all transactions that carry the standard 20% VAT rate. This will usually apply to the following:

• Catering services.
• Alcoholic drinks.
• Crisps and savoury snacks.
• Hot food.
• Sports drinks.
• Ice cream.
• Soft drinks and mineral water.
• Electricity – businesses (in some cases 5% – T5).
• Gas – businesses (in some cases 5% – T5).
• eBay seller fees.

 

Exempt Goods and Services, 0% – T2

Where goods and services are exempt from VAT, you should use the code T2 within your Sage 50 accounts software. This often applies to the transactions listed below

• Some land and building sales.
• Some finance charges.
• Education and some training.
• Betting and gaming.
• Burials and cremation.
• Postal services. 

Reduced rate, 5%- T5

Reduced rate transactions will need to use the T5 tax code most often used for

• Mobility aids for the elderly.
• Smoking cessation products – nicotine patches and gum.
• Electricity – charity, domestic and residential.
• Gas – charity, domestic and residential.

Non-Vatable Items – T9

Where there are transactions featuring non-vatable items the code T9 should be used. This often includes

• Wages
• Bank or cash transfers
• PAYE and NI contributions
• Capital
• Loans, dividends, and gifts of money

Reverse Charge Items – T20

Some items are subject to VAT reverse charges, in these cases the code T20 should be used. These transactions usually fall into the following categories

• Wholesale supplies of telecommunications services
• Mobile phones in certain circumstances
• Computer chips in certain circumstances
• Emissions allowances

Reduced rate on hospitality, holiday accommodation and attractions

Following on from the temporarily reduced rate of 5% for the hospitality, holiday accommodation and attractions industries, a new rate of 12.5% was introduced in October 2021. This rate is due to run until March 2022 and affects the following transactions

• Supplies of food and non-alcoholic drinks for on-premises consumption in restaurants, pubs, bas, and cafes.
• Supplies of hot takeaway food and hot takeaway non-alcoholic drinks
• Supplies of hotel and holiday accommodation & admission to certain attractions in the UK.

To account for these transactions, Sage recommends creating a new tax code such as T32 or the next available code if this is already in use. Further information on this is available from Sage here.

If you’re still unsure which Sage VAT tax code to use in 2022, try the Sage tax code finder.