bank charges - The Book-keepers Forum (UK)

lubish · Veteran Member

bank charges

Amanda · Expert

Hi,

Go to Banking menu, go to Bank Payment, Nominal code is 7901 (Bank Charges) and T9 tax code.

This is for Sage Instants I expect its similar for Sage 50.

HTH,
Amanda

BackOfficeGroup · Guru

also depends on whether you are VAT registered or not, as some do have VAT, other do not, so use T1 and T2 accordingly.

P

Merlion ABS · Senior Member

yeah keep an eye out for the VAT as required as some banks dress up their charges as management fees and charge VAT. Lloyd's TSB i have been told do this.

Although everyday charges don't have VAT on them and yes as Amanda says, 7901 for bank charges in Sage using the T9 vat code.

Susie Sue · Senior Member

being a bit pernickity - but what happened to please and thankyou? hmm

lubish · Veteran Member

hello,

thanks, that will credit the bank account, what is the double entry for this, which account will get debited

Merlion ABS · Senior Member

Debit 7901 Bank Charges in Sage.

lubish · Veteran Member

Thanks

BackOfficeGroup · Guru

I use T2 on sage for bank charges as they are exempt not outside the scope and should be shown as a charge in box 7. T9 would mean they do not show.

P

ADAS · Guru

Same here, i only seem to use t9 for capital, drawings, wages and journals these days.

Amanda · Expert

HI,

I use T9 as that was what the accountant told me to do and hes not commented thats its wrong for the last couple of years. The bank charges that apply to my customer does not have VAT.

A

PhilMcTankup · Senior Member

A nice feature in Sage 50 Accounts is that you can enter bank charges and/or interest charged and/or interest earned appearing on the bank statement while doing the bank reconcilition.

To confirm what others have said, default nominal code for bank charges in Sage is 7901 (interest charged is debited to 7900).
Sage automatically uses tax code T2 (UK VAT exempt) and T9 is definitely the wrong tax code to use as it means these costs will be disregarded when Sage compiles the total net value of purchases for box 7 of the VAT return.
Interest earned is credited to nominal code 8222 and again is automatically given tax code T2 by Sage.

Dalbir · Senior Member

Merlion ABS wrote:

yeah keep an eye out for the VAT as required as some banks dress up their charges as management fees and charge VAT. Lloyd's TSB i have been told do this.

Although everyday charges don't have VAT on them and yes as Amanda says, 7901 for bank charges in Sage using the T9 vat code.

Hi Paul

Am suprised that LLoyds TSB charge VAT on their bank charges (sorry management fees). LLoyds gain nothing and new Non-VAT registered business owners might look elsewhere to bank with.

Dalbir

semsley · Guru

Three of my clients bank with Lloyds and I haven't seen any banks charges dressed up as management charges and including VAT.

They have charged VAT for producing interest statements for accountants when the year end is other than 4th April.

-- Edited by semsley on Monday 20th of September 2010 11:33:10 PM

Wella · Expert

I think it is not because they charge VAT, it's because it is an exempt supply, so therefore should be included on the return and coded T2 on Sage

Extract from HMRC

2.10 Current, deposit and savings accounts

Many of the charges made by banks, building societies or similar organisations in connection with the operation of a current, deposit or savings account will be exempt. Exceptions include charges made for:

the issue of certain types of financial certificate (for example, audit and balance certificates supplied to third parties)
the extra cost of special printing or overprinting of cheque books and paying-in books.

Donna CBK · Senior Member

Just to come back to original point if NOT VAT registered T9. The rest I too believe is correct as per a HMRC workshop.
Some bank charges have VAT as for items that are a service offered.
Hope helps

Donna
Sage Accredited Accounant Partner

BackOfficeGroup · Guru

If you put in T9, then the expense will not show in the VAT return, which in my opinion in wrong, as all purchases for the business should appear on the VAT return, even if they do not have VAT upon them.

P

semsley · Guru

BackOfficeGroup wrote:

If you put in T9, then the expense will not show in the VAT return, which in my opinion in wrong, as all purchases for the business should appear on the VAT return, even if they do not have VAT upon them.

P

Whilst I agree that all purchases should appear on the VAT return, I would not consider bank charges as a purchase.

Rhianrach · Expert

I always thought bank charges were exempt so T2