A company outside the UK defines its own tax rates in Books. They are then used for invoices, credit notes and bills. A UK company already has the UK VAT rates built in, so Tax rates is not shown for it.
Add a rate
- Open the Books app, then Setup, then Tax rates.
- Fill in:
- Code, for example CA-SALES. Invoice and bill lines refer to this code.
- Name.
- Rate (%). Up to four decimal places, so a combined rate such as 8.875 works.
- Applies to: Sales, Purchases or Sales and purchases.
- From (date), and To (date, optional).
- Tax paid can be claimed back, for a purchase rate you can recover. This box appears once Applies to is not Sales.
- Select Add rate.
The list shows each rate's Code, Name, Rate (%), Applies to, From and To (Open-ended if there is no end), and marks recoverable rates with Recoverable.
Change a rate
A rate applies from its start date. To change it, add the new rate from the day it starts. Books ends the earlier open-ended rate the day before. Overlapping dates for one code are refused. Select Retire on an open-ended rate to end it. Invoices already issued keep the tax they were priced with, and a credit note charges the rate of the invoice it credits.
Where they are used
- Invoices: type the code on a line's tax code field. Tax per line is the net amount times the rate, rounded half up to the currency's smallest unit. For example, 8.875% on 100.00 is 8.88.
- Bills: a code that applies to purchases is priced at the rate in force on the bill's date.
A line with no tax code carries no tax, and a line that names a code you have not defined is refused. Until you add a rate, the list reads "No tax rates yet. Invoices carry no tax until you add one."
Tax rates are set by owners and admins.