> ## Documentation Index
> Fetch the complete documentation index at: https://vatextract.com/docs/llms.txt
> Use this file to discover all available pages before exploring further.

# VAT Codes

> Automatic accounting software VAT code mapping for line items

VATextract automatically assigns the correct VAT code to each line item based on its VAT rate and your accounting software—saving you from manually selecting codes during bookkeeping.

## How It Works

<Steps>
  <Step title="Invoice Processed">
    When an invoice is processed, the VAT rate for each line item is extracted via OCR.
  </Step>

  <Step title="Rate Matched">
    The extracted rate is matched to the closest standard UK VAT rate (20%, 5%, 0%, Exempt, or Outside Scope).
  </Step>

  <Step title="Code Assigned">
    The appropriate VAT code for your accounting software is automatically assigned to each line item.
  </Step>
</Steps>

<Info>
  VAT codes appear in the **Line Items** tab of each invoice and are included in all exports (Excel, CSV, clipboard).
</Info>

## Supported Accounting Software

VATextract maps VAT rates to the correct codes for the following platforms:

<Tabs>
  <Tab title="Sage">
    Sage uses T-codes for VAT classification.

    | VAT Rate      | Code | Description          |
    | ------------- | ---- | -------------------- |
    | 20%           | `T1` | Standard rate        |
    | 5%            | `T5` | Reduced rate         |
    | 0%            | `T0` | Zero rated           |
    | Exempt        | `T2` | Exempt supply        |
    | Outside Scope | `T9` | Outside scope of VAT |
  </Tab>

  <Tab title="Xero">
    Xero uses separate codes for expenses and income.

    **Expenses:**

    | VAT Rate      | Code                    |
    | ------------- | ----------------------- |
    | 20%           | `20% (VAT on Expenses)` |
    | 5%            | `5% (VAT on Expenses)`  |
    | 0%            | `Zero Rated Expenses`   |
    | Exempt        | `Exempt Expenses`       |
    | Outside Scope | `No VAT`                |

    **Income:**

    | VAT Rate      | Code                  |
    | ------------- | --------------------- |
    | 20%           | `20% (VAT on Income)` |
    | 5%            | `5% (VAT on Income)`  |
    | 0%            | `Zero Rated Income`   |
    | Exempt        | `Exempt Income`       |
    | Outside Scope | `No VAT`              |
  </Tab>

  <Tab title="QuickBooks">
    | VAT Rate      | Code      | Description   |
    | ------------- | --------- | ------------- |
    | 20%           | `20.0% S` | Standard rate |
    | 5%            | `5.0% R`  | Reduced rate  |
    | 0%            | `0.0% Z`  | Zero rated    |
    | Exempt        | `Exempt`  | Exempt        |
    | Outside Scope | `No VAT`  | Outside scope |
  </Tab>

  <Tab title="KashFlow">
    | VAT Rate      | Code  | Description           |
    | ------------- | ----- | --------------------- |
    | 20%           | `20%` | Standard rate         |
    | 5%            | `5%`  | Reduced rate          |
    | 0%            | `0%`  | Zero rated            |
    | Exempt        | `0%`  | Exempt (same as zero) |
    | Outside Scope | `N/A` | Outside scope         |
  </Tab>

  <Tab title="Generic">
    If no specific software is selected, generic codes are used.

    | VAT Rate      | Code | Description   |
    | ------------- | ---- | ------------- |
    | 20%           | `SR` | Standard Rate |
    | 5%            | `RR` | Reduced Rate  |
    | 0%            | `ZR` | Zero Rate     |
    | Exempt        | `EX` | Exempt        |
    | Outside Scope | `OS` | Outside Scope |
  </Tab>
</Tabs>

## Smart Rate Matching

VATextract uses intelligent matching to handle extracted VAT rates that aren't exact:

| Extracted Rate | Matched To     | Reason                            |
| -------------- | -------------- | --------------------------------- |
| 19.8% – 22%    | 20% (Standard) | Within tolerance of standard rate |
| 4% – 6%        | 5% (Reduced)   | Within tolerance of reduced rate  |
| -0.5% – 0.5%   | 0% (Zero)      | Near-zero rate                    |

This accounts for minor rounding differences in OCR extraction.

## Line Items with VAT Codes

Each line item in an exported invoice includes the VAT code alongside other fields:

```json theme={null}
{
  "description": "Professional Services",
  "quantity": 10,
  "unitPrice": 100.00,
  "amount": 1000.00,
  "vatRate": 20,
  "vatCode": "T1",
  "vatAmount": 200.00
}
```

## Where VAT Codes Appear

<CardGroup cols={2}>
  <Card title="Line Items Tab" icon="table">
    VAT codes are displayed in the Line Items table when reviewing an invoice.
  </Card>

  <Card title="Excel/CSV Export" icon="file-excel">
    VAT codes are included as a column in all spreadsheet exports.
  </Card>

  <Card title="Clipboard Copy" icon="clipboard">
    Copying line items includes the VAT code column ready for pasting into your accounting software.
  </Card>

  <Card title="Airtable Sync" icon="database">
    VAT codes are synced to your Airtable line items table.
  </Card>
</CardGroup>