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Silv10
New Member
June 30, 2026
Question

Tax types on expenses

  • June 30, 2026
  • 2 replies
  • 53 views

So I have been forced to go MTD. I am a sole trader and not VAT registered. I was wondering what tax type I need to put into my standard material receipts and what to put in regards to tax inclusion and tax type. I tried to use ChatGPT and Google but it comes up with mixed results. Any help would be great. I’ve also done all of my invoices as tax out of scope. I think this is correct? Let me know if not, thanks in advance guys. Really struggling with all this new style of book keeping. 

2 replies

L
Lolly_NCQuickBooks Team
QuickBooks Team
June 30, 2026

You got it right! Since you're not VAT registered, you can use Out of Scope, No VAT (0%), or Exempt when recording your expenses or receipts. For the tax deduction setting, you can select Exclusive of Tax and leave the VAT registration number field blank.

 

As for the trigger for setting up Making Tax Digital (MTD), starting 6 April 2026, clients who are sole traders with total qualifying income over £50,000 will need to follow the HMRC Making Tax Digital for Income Tax rules.

 

I'm adding this article that you can refer to when setting up and editing VAT settings, codes, and rates in QuickBooks Online.

 

Don’t hesitate to drop a comment if you have additional questions about taxes.

S
Silv10Author
New Member
June 30, 2026

So because I’m not VAT registered anything that says “Tax”just select out of scope? Including invoices and receipts 

G
GenieBabe_LQuickBooks Team
QuickBooks Team
June 30, 2026

Yes, exactly. Because you aren't registered for VAT, you won't be able to reclaim any tax. When recording invoices, expenses, or receipts, you can select Out of Scope, No VAT (0%), or Exempt, as they will all ensure no tax is calculated.

 

You can remove the VAT column in your invoice template by going to Custom form styles.

 

Feel free to leave a comment below if you need anything else. If you ever get stuck on a confusing receipt, just let us know. We're here to help.

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