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How to set up UK VAT in Magento

There didn’t seem to be much online to show how to add VAT to Magento sites trading in the United Kindgom so after a little trial and error I’ve identified the actions required.

Set up Product Classes

• From the sales menu, select the Tax option and then the Product Tax Class.
• Add three new classes; VAT Standard, VAT Reduced and VAT Zero
• If only shipping to the UK all other tax rates can be deleted.

Set up Customer Classes

• From the sales menu, select the Tax option and then the Customer Tax Classes
• Check that Retail Customer is listed, if not then add new

Set up Tax Zones and Rates

• From the sales menu, select the Tax option and then the Manage Tax Zones and Rates option
• Remove US rates
• Add three new rates
  • VAT Standard rate; country = United Kingdom and Rate = 15.00 (this will change back to 17.50 in January 2010)
  • VAT Reduced rate; country = United Kingdom and Rate = 5.00 (current rate for reduced VAT)
  • VAT Zero rate; country = United Kingdom and Rate = 0.00

Set up Tax Rules

• From the Sales menu, select the Tax option and then the Manage Tax Rules
• Add three new tax rules highlighting classes and rates to select.
  • VAT Standard
    • Name = VAT Standard
    • Customer Tax Class = Retail Customer
    • Product Tax Class = VAT Standard
    • Tax Rate = VAT Standard Rate
  • VAT Reduced
    • Name = VAT Reduced
    • Customer Tax Class = Retail Customer
    • Product Tax Class = VAT Reduced
    • Tax Rate = VAT Reduced Rate
  • VAT Zero (you get the idea...)
    • Name = VAT Zero
    • Customer Tax Class = Retail Customer
    • Product Tax Class = VAT Zero
    • Tax Rate = VAT Zero Rate

Applying Tax Classes to Products

Once the rules, rate and classes have been set the Tax Class will be visible within the product price details screen when adding and amending products.

Configuring the Display

Visit UK VAT - Simple Approach to see how to configure the tax for display.