Blog
Monthly posts going deeper into specific nominal codes — the debits, the credits, and a worked example of how the entry actually flows.
What Is VAT? A Plain-English Explanation
What VAT actually is, how output and input tax work, who has to register, and the three UK rates.
August 2026The Flat Rate VAT Scheme Explained
How the Flat Rate Scheme works, who can join, how the percentages are set, and a worked example.
August 2026The History of VAT in the UK
How VAT replaced Purchase Tax in 1973, and how the standard rate has moved from 10% to 20% over five decades.
August 2026Freehold vs leasehold property: codes 0010 and 0011
What separates the two Fixed Assets property codes, how VAT can land on a leasehold purchase, and why one gets amortised and the other usually doesn't.
July 2026VAT control accounts explained: codes 2200, 2201 and 2202
Why VAT sits across three different nominal codes, how they relate to each other, and a worked example of a quarter's VAT return.
August 2026Plant and machinery depreciation: codes 0020 and 0021
How the asset cost code and its accumulated depreciation contra-asset code work together.
August 2026Office equipment depreciation: codes 0030 and 0031
The cost code and accumulated depreciation code for office equipment, with a worked example.
August 2026Furniture and fixtures depreciation: codes 0040 and 0041
How furniture and fixtures depreciate on the books, and how the two codes link together.
August 2026Motor vehicles depreciation: codes 0050 and 0051
Tracking a vehicle's cost against its accumulated depreciation, with a worked example.
August 2026Stock, work in progress, finished goods and raw materials: codes 1001-1004
How goods move through four Current Assets codes as they're worked on and sold.
August 2026Debtors, sundry, other and inter-company: codes 1100, 1101, 1102 and 1104
Four ways Sage splits money owed to a business, and why inter-company debt gets its own code.
August 2026Prepayments explained: code 1103
Why paying in advance creates an asset, not an expense, until the period it relates to arrives.
August 2026Provisions for credit notes and doubtful debts: codes 1105 and 1106
The two contra-asset codes that trim Debtors down to a realistic, collectable figure.
August 2026Current, deposit and building society accounts: codes 1200, 1210 and 1220
Why a business might hold cash across three different bank codes.
August 2026Petty cash, cash register and card payments: codes 1230, 1235, 1240 and 1250
Physical till cash and card receipts that haven't cleared yet, each with its own holding code.
August 2026Creditors, sundry and other: codes 2100, 2101 and 2102
The mirror image of Debtors — three codes for money a business owes its suppliers.
August 2026Accruals and manual adjustments: codes 2109 and 2204
Costs not yet invoiced, and manual corrections to the VAT return figures.
August 2026Corporation Tax explained: code 2110
How the year's tax charge gets recognised as a liability before it's actually paid.
August 2026Union OSS, Non-Union OSS and IOSS tax control: codes 2205, 2206 and 2207
Three codes for EU cross-border VAT schemes, kept separate from ordinary UK VAT.
August 2026P.A.Y.E., National Insurance, net wages and pension fund: codes 2210, 2211, 2220 and 2230
Money withheld from payroll and held until it's paid over to HMRC or the pension provider.
August 2026Loans, hire purchase and mortgages: codes 2300, 2310 and 2330
Borrowing repaid over more than a year, split by the type of finance.
August 2026Directors' loan accounts explained: codes 2301 and 2302
Money owed between a company and its directors personally, which can flip either way.
August 2026Ordinary and preference shares explained: codes 3000 and 3010
How the two share classes differ, and why Sage keeps them apart.
August 2026Reserves and undistributed reserves: codes 3100 and 3101
Profit set aside for a purpose, versus profit simply retained in the business.
August 2026Profit and Loss Account explained: code 3200
The balance sheet figure that carries forward every year's retained profit or loss.
August 2026Sales Types A-E explained: codes 4000, 4001, 4002, 4100 and 4101
Sage's generic starter sales codes, and why most businesses rename them.
August 2026Discounts Allowed explained: code 4009
The sales code that runs against the grain, carrying a debit balance instead of credit.
August 2026Management Charges Receivable and Flat Rate Benefit/Cost: codes 4010 and 4099
Inter-company recharges, and the VAT Flat Rate Scheme adjustment.
August 2026Sales of Assets and Credit Charges: codes 4200 and 4400
Proceeds from selling old equipment, and late payment charges levied on customers.
August 2026Miscellaneous income codes: 4900-4905 explained
Six codes for income that falls outside a business's core trading activity.
August 2026Materials, imports, misc purchases and packaging: codes 5000, 5001, 5002 and 5003
The raw inputs a business buys to make what it sells, split by source and type.
August 2026Discounts Taken explained: code 5009
The mirror image of Discounts Allowed — a credit balance recording supplier discounts received.
August 2026Carriage, import duty and transport insurance: codes 5100, 5101 and 5102
The real cost of getting purchased goods to the business, beyond the invoice price.
August 2026Opening and closing stock explained: codes 5200 and 5201
How these two codes turn raw purchases into a true cost of sales figure.
August 2026Productive labour, cost of sales labour and sub-contractors: codes 6000, 6001 and 6002
People costs directly tied to producing sales, sitting alongside materials in cost of sales.
August 2026Sales commissions, promotions, advertising, gifts and P.R.: codes 6100-6203
The cost of actively winning sales, treated as a direct expense rather than a general overhead.
August 2026Miscellaneous Expenses explained: code 6900
The Direct Expenses catch-all code, and why it should stay small.
August 2026Gross wages, staff salaries and regular/casual wages: codes 7000, 7003, 7004 and 7005
Splitting non-director payroll by how a business's workforce is structured.
August 2026Directors' salaries, remuneration and employers NI: codes 7001, 7002 and 7012
Why director pay is kept separate from ordinary staff pay throughout the chart of accounts.
August 2026Employers N.I. and Employers Pensions explained: codes 7006 and 7007
The true, fully-loaded cost of employing someone beyond their gross pay.
August 2026Recruitment Expenses and Adjustments explained: codes 7008 and 7009
The cost of hiring, and correcting payroll errors from a prior period.
August 2026SSP and SMP Reclaimed explained: codes 7010 and 7011
Statutory pay reclaimed from HMRC, reducing the true cost of staff absence.
August 2026Rent, water rates, general rates and premises insurance: codes 7100, 7102, 7103 and 7104
The standing cost of occupying business premises.
August 2026Electricity, gas, oil and other heating costs: codes 7200, 7201, 7202 and 7203
Energy costs split by fuel type, useful since prices move independently.
August 2026Vehicle fuel, repairs, licences and insurance: codes 7300, 7301, 7302 and 7303
The core running costs of any business vehicle.
August 2026Misc motor expenses, congestion charges, mileage and scale charges: codes 7304, 7305, 7306 and 7350
Odder motoring costs, employee mileage claims, and the VAT fuel scale charge.
August 2026Travelling, vehicle hire and hotels: codes 7400, 7401 and 7402
The cost of business trips away from base.
August 2026UK and overseas entertainment, overseas travelling and subsistence: codes 7403-7406
Client entertainment, overseas trips, and why entertainment VAT usually can't be reclaimed.
August 2026Printing, postage, stationery and books: codes 7500, 7501, 7502 and 7503
The small, steady costs of running a physical office.
August 2026Telephone, internet, computers and mobile charges: codes 7550, 7551, 7552 and 7553
The connectivity and IT running costs of a modern business.
August 2026Legal, audit and accountancy fees: codes 7600, 7601 and 7602
The core professional services most limited companies need at least once a year.
August 2026Consultancy, professional fees, management charges and software subscriptions: codes 7603-7606
Discretionary outside expertise and recurring software costs.
August 2026Equipment hire, machine maintenance and leasing: codes 7700, 7701, 7702 and 7703
Equipment used without owning it outright, and keeping it maintained.
August 2026Repairs and renewals, cleaning, laundry and premises expenses: codes 7800, 7801, 7802 and 7803
Keeping premises usable day to day, beyond rent, rates and utilities.
August 2026Bank interest paid, bank charges and currency charges: codes 7900, 7901 and 7902
The cost of using everyday banking services.
August 2026Loan interest, H.P. interest, credit charges and factoring charges: codes 7903, 7904, 7905 and 7908
The cost of borrowing and financing beyond the everyday bank account.
August 2026Exchange Rate Variance and Other Interest Charges explained: codes 7906 and 7907
Currency movement gains and losses, and a catch-all for miscellaneous interest.
August 2026Depreciation charges explained: codes 8000, 8001, 8002, 8003 and 8004
The annual expense side of asset depreciation, linked back to Fixed Assets.
August 2026Bad Debt Write Off and Provision explained: codes 8100 and 8102
Debts confirmed as uncollectable, and the year-end estimate for future losses.
August 2026Donations, subscriptions and clothing costs explained: codes 8200, 8201 and 8202
Charitable giving, professional memberships, and workwear.
August 2026Training costs, insurance and refreshments explained: codes 8203, 8204 and 8205
Investing in staff development, general insurance, and workplace refreshments.
August 2026Cash Register Discrepancies and Sundry Expenses explained: codes 8206 and 8250
Till differences worth watching, and a final general catch-all code.
August 2026Taxation, Suspense and Mispostings accounts explained: codes 9001, 9998 and 9999
The final three codes — the tax charge, and two temporary error-correction holding accounts.