How does VAT work in Bokio?

VAT when entering transactions

When you enter transactions in Bokio’s modern bookkeeping you always state the amount actually paid. The amount should therefore include VAT if the cost includes VAT. For international purchases where there is no VAT, this is the amount paid. It’s important that you choose correctly what the cost relates to and whether it was incurred in Great Britain, in the EU, or outside the EU. 

Bokio then calculates the VAT automatically. If the amount is GBP 39.90 for the purchase of office materials, the opening VAT will be GBP 6.65, as VAT on materials purchased is 20%. 39.90 - 39.90/1.20 = GBP 6.65.

Once you click “Next”, you will see a preview of how the journal entry will look. This includes the calculated VAT. All these values can be changed in the preview if you want.

If you want to record the VAT yourself, you can always use manual bookkeeping where you can enter transactions as you want.

VAT-exempt activities

If you are not registered for VAT at HMRC you can set this in Bokio. Go to Settings → Fiscal years and choose the current fiscal year. In “What is your VAT registration status?” dropdown you can select “Not registered for VAT”.

With this setting you can use our smart bookkeeping without having any VAT connected to it.