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To begin, open your company file in Sage 50 and navigate to the settings or configuration menu. Locate the tax codes section where default tax settings are stored. Select the existing default tax code and update it according to your current business requirements. Always double-check VAT rates before saving changes.

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Sage tax codes (and specifically sage 50 tax codes) are short identifiers that control how sales tax, VAT, GST, or use tax is applied to invoices, purchases, and other transactions. They automate rate calculations, exemptions, reverse charges, and correct reporting on tax returns or VAT summaries.
Common sage 50 tax codes include:

TAX/TX – Standard taxable sales/purchases
EX – Exempt transactions
ZP/NR – Zero-rated or non-resident
PT – Taxable purchases (input tax)
UK-specific: T0 (zero-rated), T1 (standard 20%), T2 (exempt), T9 (reverse charge), etc.

To set up sage tax codes:

Go to Setup > Settings > Company > Sales Taxes > Tax Codes
Add new code with description, link tax authorities/rates
Assign defaults to customers, vendors, items, or GL accounts
Test on sample transactions

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