This article explains how to apply the temporary VAT rate of 12.5% to sales. You will need to follow this process when recording qualifying sales in the hospitality and tourism industries between 1st October 2021 and 31st March 2022.
For information on applying the temporary VAT rate to purchases, please see this article.
Please note that if you create an invoice using the temporary 12.5% VAT rate and need to edit the invoice to change the date to 1st April 2022 onwards, you’ll need to change the VAT rate to the appropriate rate or amount as the temporary 12.5% VAT rate will no longer be available.
To apply the temporary rate of 12.5% VAT to a 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.
Select the transaction that you’d like to apply the temporary rate of 12.5% VAT to.
Select ‘Sales’ from the ‘Type’ drop-down menu and select ‘12.5%’ from the ‘Including [X] VAT’ drop-down menu.
Select ‘Explain Transaction’ to complete the process.
If you have more than one sales transaction that you need to apply the temporary rate of VAT to, tick the checkboxes to the left of the relevant transactions and select ‘Sales’ from the ‘Type’ drop-down menu in the panel on the right-hand side.
Select ‘12.5%’ from the ‘Including [X] VAT’ drop-down menu and select ‘Explain [X] transactions’ to explain all the selected transactions in the same way.
For more information on explaining multiple transactions at once, please see this article.
A record of the bank transaction(s) being explained will appear in your Audit Trail report.
FreeAgent is registered with the Financial Conduct Authority under the Payment Services Regulations 2017 (register no. 799763) for the provision of account information services.
Registered in sunny Scotland No. SC316774 - One Edinburgh Quay, 133 Fountainbridge, Edinburgh, Scotland, UK EH3 9QG