What a tax rate is
A tax rate has a name, a treatment and a percentage.
Standard charges the percentage you enter.
Zero-rated, Exempt and No tax always charge 0% but print differently on the invoice and matter for your accounts.
When a rate is applied to a line, the line keeps a copy of the percentage and treatment. Changing a rate later affects new lines, not invoices you have already issued.
Before you start
Tax Enabled is on in Settings → Invoice settings. Without it there is no Tax column, no tax on lines and no breakdown in the totals.
Your Custom Tax Name is set if you do not call it VAT (for example GST). It appears everywhere the word Tax is shown.
You know your registration number. It prints in the "Invoice from" block on every invoice once entered.
You know which kinds of line you sell: services (labour), parts and stock, and collection and return charges. Each can have its own default rate.
Step by step: setting up your rates
Go to Settings → Tax rates.
Click Add tax rate. Enter a name (for example Standard), choose the treatment, enter the rate and click Create tax rate. Tick Use as the default rate for new lines for your main rate.
Repeat for each rate you use. Most workshops need two or three: a standard rate, a zero or exempt rate, and occasionally a reduced rate.
In Line defaults, choose the rate each line type should use when the item itself has no rate: Services, Parts / stock and Collection / return. Business default falls back to your default rate.
Enter your registration number in the field below the table.
Rates on individual items
Any service or stock item can carry its own rate, set in the item's editor. To change many at once, select them on the Stock or Services page and choose Change tax rate… from the bulk actions bar.
How a line decides its rate
When a line is added to an invoice, the rate is worked out in this order. The first match wins.
A rate set on the line itself (someone clicked the price or the Tax column and chose one).
The item's own rate, if the service or stock item has one.
The line-type default for services or parts from Settings → Tax rates.
The business rate from Invoice settings, or the invoice's own rate if one was set on that invoice.
In the Tax column, Default (20%) means steps 2 to 4 are in play and the line is inheriting. A plain 20% means step 1: the line has its own rate.
Worked examples
A. Everything on one rate. A service and two parts, no item rates, line defaults both set to Standard 20%. Every line shows Default (20%). The totals show a single VAT (20%) row.
B. One zero-rated part. Same invoice, but the inner tube's stock item carries Zero-rated. That line shows Default (0%). The totals now show a VAT total with two lines beneath: 20% on £120.00 and 0% on £6.00.
C. A one-off override. A customer is exempt for one labour line. Click that line's price, set Tax to your Exempt rate and apply. The Tax column shows 0% with no "Default" prefix, and the breakdown shows the exempt amount separately.
Editing and archiving rates
Edit changes the name, treatment or percentage for new lines. Existing invoices keep the rate they were issued with.
Make default switches the business default. Lines that inherit will pick up the new default; lines with their own rate do not change.
Archive (the bin icon) removes a rate from the list. Before it goes you see everywhere it is used as a default (services, stock items, line defaults) and choose which rate those should switch to. Archiving runs in the background and the rate leaves the list once every item has been updated.
Accounting and point of sale
Each line's rate and discount are what is used to calculate the invoice, and connected integrations such as Xero, Square and Lightspeed receive line-level amounts so their figures match the invoice.
With Xero connected, each line can also carry its own revenue account, chosen in the price popover. Lines that do not set one use the account mapped for services or parts.
If Lock Invoices When Paid is on, a paid invoice becomes read-only: its lines, rates and totals are fixed as paid. Cancel it and raise a new invoice to make changes.
Best practices
One clear default. Make your standard rate the default and let most lines inherit it. Reach for overrides only for genuine exceptions.
Name rates by what they are for, not by the number: Standard, Zero-rated parts, Exempt labour. Numbers change; purposes do not.
Set line defaults before importing stock. Imported items without a rate fall back to the parts default, so get that right first.
Give item-level rates to the items that always differ, such as children's helmets or zero-rated goods, so staff never have to remember.
Glance at the breakdown before sending. If you expected one rate and see two, a line is carrying a rate it should not.
Common mistakes
Editing a rate's percentage to fix an old invoice. Issued invoices keep their snapshot. Correct the invoice itself, or cancel and reissue.
No line default for parts. Parts then inherit the business rate, which may be your labour rate. Set both line defaults.
Turning Tax Enabled off to hide the column. That switches tax off for the business. Use the Invoice tab's Settings menu to tidy the table instead.
Deleting a rate that items depend on. Use Archive and pick the replacement rate in the dialog rather than editing the items one by one afterwards.
Troubleshooting checklist
Is Tax Enabled on in Settings → Invoice settings?
Does the line show Default (…) or a plain rate? A plain rate is an override on that line.
Does the service or stock item carry its own rate in its editor?
Are both Line defaults set, or is one still on Business default?
Is the invoice locked (paid, with Lock Invoices When Paid on)?
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