Hi Mindy,

The codes used on Sage can be confusing. You may find the following useful:


Standard rated (T1 tax code on Sage):
Most items are standard rated



Exempt supplies (T2 tax code on Sage):
No tax is chargeable on an exempt supply, and input tax cannot be recovered except as allowed under the partial exemption provisions.

Examples:
Finance charges, including bank account charges
Insurance
Postal services
Betting, gaming and lotteries
Land sales
Educational services
Health and welfare
Trade union and professional bodies
Charitable fund raising events
Sports and sport competitions
Works of art
Burial and cremation
Subscriptions to trade unions, professional and other interest bodies
Supplies of goods where input tax cannot be recovered



Zero rated supplies (T0 tax code on Sage):
This is a taxable supply, but the rate of tax is nil.

Examples:
Food (raw or unheated)
Sewerage services and water
Books etc
Construction of buildings, etc
Protected buildings
International services
Transport - ferries, trains and air fares
Caravans and houseboats
Gold
Bank notes
Drugs, medicines, aids for the handicapped, etc
Imports, exports, etc
Charities, etc
Childrens Clothing and footwear
Caravans and houseboats



Outside the scope of VAT (T9 tax code on Sage):
These typically crop up when you try to analyse out the transactions listed
in your bank statement or cash book. The following items are outside the scope of the VAT regulations, and you should never account for VAT in respect of them.

Examples:
Salary payments
Cash transfers between bank accounts
Capital introduced and drawings of a proprietor or partner
Capital introduced and drawings of a director against his or her director's loan account
Payment of dividends
Payment of any tax liabilities


Best wishes.

Wendy