I would be very grateful if anyone could explain to me the partial exemption codes on Sage:
T13 - Use for all other expenditure on which VAT is charged, that's expenditure not relating or attributable to either vatable or exempt income. In other words, all expenditure that is 20% VAT but is not allocated to T1 and will be used for partial exemption calculation?
T15 - Use to enter supplier invoices that include VAT, for goods and services directly relating or attributable to your exempt income. Our nurserys income is classified as exempt and therefore all expenditure related to this was recorded under T2. Does this mean that under a partial exemption calculation I should change my allocations to T15 instead of T2, or do I have to separate this and the expenditure that is not Vatable enter under T2 and expenditure that has VAT but classified as exempted should be under T15 code?
Apologies if my question looks silly just want to make sure that I understand these correctly.
I wonder why you are registered for VAT. Do you make any taxable supplies?
Assuming you do, then T13 is for non-attributable purchases, ie: overheads.
Expenditure for the nursery, and other exempt activity should go in T15. You can use T2 if that is easier. But you will then need to journal it when you do your VAT Returns and Annual Adjustments.
Will be worth having someone look at one or two VAT Return calculations to make sure the non-deductible input tax is being properly identified and journalled.
