Split a bank transaction between multiple categories
This article explains how to break down a bank transaction that needs to be explained partly into one category and partly into another.
For example, a single purchase may include box files that need to be explained to ‘Stationery’ and a book of stamps that needs to be explained to ‘Postage’.
If you're registered for VAT, it’s important to allocate the relevant amount to each category and apply the appropriate VAT rates if they differ between the categories. If both the categories you'll be using have VAT on them, then you need to apportion the VAT between them. If only one category has VAT then all the VAT on the receipt would go into that category.
Please note:
- You can only split bank transactions that are currently unexplained. If the bank transaction has already been explained or marked for approval, you'll need to remove the explanation before following the steps below.
- It’s not possible to split bank transactions that have been entered manually or are in a locked accounting period.
- You’ll need to have level 6 access or above to your FreeAgent account to split bank transactions.
1. Navigate to the relevant bank transaction
Navigate to the 'Banking' tab at the top of the screen and select 'Bank Accounts' from the drop-down menu.
Choose the relevant bank account from the list and click on the transaction that you would like to explain to open up the explanation options.
2. Split the bank transaction
Next, you will need to split the bank transaction into the relevant amounts for each category.
To do this, click on ‘Adjustments’ in the bottom-right corner and choose 'Split transaction' from the drop-down menu. If you need to allocate fees or commission, select ‘Fees and commissions’ instead.
Enter the amount that you would like to allocate to the first category in the ‘Value’ field and select the relevant transaction type using the ‘Type’ drop-down menu.
Select the appropriate VAT rate using the ‘VAT’ drop-down menu. To allocate a certain amount of VAT to the transaction, select ‘Amount’ from the ‘VAT’ drop-down menu and enter the appropriate amount.
You’ll see how much of the transaction value you’ll still need to explain after allocating the amount to the first category.
Then, select the relevant category to allocate the first amount to from the ‘Category’ drop-down menu and enter a description for the first transaction.
Select ‘Save and add another’ at the bottom of the screen to explain the amount to the first category.
3. Explain the remaining balance
Next, you will need to explain and categorise the remaining balance of the bank transaction. In the above example, we’ve explained £80 of the original £100, so there is £20 remaining.
Select the relevant type and VAT rate from the drop-down menus and enter the amount to be allocated to the second category. To allocate a certain amount of VAT to the transaction, select ‘Amount’ from the ‘VAT’ drop-down menu and enter the appropriate amount.
Select the relevant category from the ‘Category’ drop-down menu and enter a description.
Select ‘Save and finish’ at the bottom of the screen to allocate the remaining amount to the second category.
The bank transaction will then be split between the selected categories.