Insights

Updated for the 2026/27 tax year

Sage 50 Accounts uses VAT codes to help businesses record transactions correctly and prepare accurate VAT returns. Each code represents a particular VAT rate or treatment, such as standard-rated sales, VAT-exempt purchases, or imports.

Using the correct code is important, as mistakes can affect how transactions are reported to HMRC.

Below is a guide to the most common Sage VAT codes, including additional codes introduced to reflect changes in UK VAT rules.

Sage 50 Accounts: List of Default VAT Codes

VAT Code	Description	Common Uses
T0	Zero-rated (0%)	Most basic food products, books, children’s clothing and qualifying exports.
T1	Standard-rated (20%)	Most UK sales and purchases of goods and services.
T2	VAT-exempt	Certain insurance, financial services and qualifying postal services.
T4	EU goods sales	Certain sales of goods to VAT-registered customers in the EU, primarily relevant to Northern Ireland.
T5	Reduced-rated (5%)	Domestic fuel and power, children’s car seats and other qualifying supplies.
T7	Zero-rated EU goods purchases	Certain purchases of goods from EU suppliers, primarily relevant to Northern Ireland.
T8	Standard-rated EU goods purchases	Certain purchases of goods from EU suppliers, primarily relevant to Northern Ireland.
T9	Non-vatable	Salaries, PAYE, dividends, bank transfers and other transactions outside the scope of VAT.

Important: These are common default codes rather than a universal list. Sage VAT codes can differ depending on your software version, VAT scheme and any changes made to your company’s settings.

Additional Sage VAT Codes

Sage 50 Accounts also includes additional codes to handle international transactions and specific VAT arrangements.

VAT Code	Description	Common Uses
T14	Imports of goods with no VAT	Goods imported without import VAT being charged.
T15	Overseas services: Reverse charge	Purchases of overseas services where the reverse charge applies.
T16	Overseas services: No VAT	Purchases of overseas services where no VAT is applicable.
T17	Imports under the import reverse charge threshold	Qualifying imported goods under the relevant £135 threshold rules.
T18	Postponed VAT accounting	Imports where VAT is accounted for through the VAT Return.
T19	Import VAT not postponed	Imports where VAT is paid separately rather than postponed.
T20	Domestic reverse charge	Qualifying transactions subject to domestic reverse charge rules.
T21	CIS reverse charge: Standard rate	Qualifying construction services subject to the 20% reverse charge.
T26	CIS reverse charge: Reduced rate	Qualifying construction services subject to the 5% reverse charge.

Some codes are only available in certain Sage versions, and other specialist codes also exist. You can find the full list in Sage’s official default tax codes guide.

How Has Brexit Affected Sage VAT Codes?

Since the UK left the EU, the VAT treatment of transactions involving European customers and suppliers has changed.

For businesses in Great Britain (England, Scotland and Wales), goods purchased from EU countries are generally treated as imports, while goods sold to EU customers are treated as exports.

This means the older T4, T7 and T8 codes are no longer generally appropriate for these transactions.

Northern Ireland has different arrangements for goods traded with the EU, meaning these codes can still be relevant.

The correct VAT treatment also depends on whether a transaction involves goods or services. Businesses trading internationally should check their circumstances against HMRC’s VAT guidance before selecting a code.

What Is the Difference Between T0, T2 and T9?

These three codes can be easily confused because none involves charging VAT on the transaction. However, they have different purposes.

• T0 (Zero-rated): Used for taxable supplies charged at 0% VAT, such as most books and basic food products.
• T2 (Exempt): Used for VAT-exempt supplies, such as certain insurance and financial services.
• T9 (Non-VATable): Used for transactions outside the scope of VAT that should not appear on the VAT Return, such as salary payments and transfers between business bank accounts.

Choosing the correct code matters because zero-rated, exempt, and outside-the-scope transactions can affect VAT reporting and recovery differently.

How to Check VAT Codes in Sage 50 Accounts

You can view your company’s VAT codes directly within Sage 50 Accounts:

1. Open Settings.
2. Select Configuration.
3. Click Tax Codes.
4. Review the available codes and their settings.

Remember that VAT codes can be customised, so your existing setup may differ from Sage’s defaults.

If you’re unsure which code to use, check with your accountant before making changes. Incorrect VAT settings can affect your VAT Return.

Need Help With Sage VAT Codes?

Using the correct VAT codes helps keep your financial records accurate and ensures transactions are reported correctly to HMRC.

At Chapman, Robinson & Moore, our experienced accounting team can help you navigate Sage Accounts, understand your VAT obligations, and keep your bookkeeping running smoothly.

As Sage Accountant Partners, we can also provide guidance on using Sage effectively and help you make the most of the software available to your business.

Contact our team to find out how we can help with your Sage accounting and VAT requirements.