How to Set Up VAT Rates

In your Houzz Pro settings, you can create and save multiple VAT rates to be used as needed in your projects. Here's how to set that up.

To start:

• Select the Settings icon near the bottom of your left navigation, then click on Business Documents in the menu.
• Under Business Document Setup at the top of the page, select Accounting. 
• Click Add VAT Rate to add a new VAT.

• Give the VAT a name and % rate. Although unlikely in the UK, if you have multiple VAT rates to include in one – select Add Rates and they will be totalled at the top to give you one rate.
• Once you save the new VAT rate, you'll be able to start using it in your estimates or proposals.

Set Default VAT Rate

If you only have one VAT rate entered, this will be the default rate. If you have more than one VAT rate in your Houzz Pro account, you can choose which one you want to set as the default VAT rate for all projects. To do so, click the three dots to the right of the desired rate and select Set as Default from the menu.

Inclusive/Exclusive VAT Settings

To give you flexibility on how you run your business, you have the option to adjust your VAT settings to be inclusive or exclusive of VAT by default on sales and expenses. What does that mean?

• Inclusive of VAT means the VAT has already been calculated and is included in the advertised sales price.
• Exclusive of VAT means the VAT is not included in the advertised sales price. Any applicable VAT would need to be added as needed.

To set the default VAT settings for sales and expenses, navigate to the Accounting tab on the Business Document Setup page, located in your Settings section. Under the VAT Settings header, select Inclusive of VAT or Exclusive of VAT. Changes will be automatically saved and applied to future documents.

You can also adjust this option on each document – just click on Customise within the document and choose the appropriate option next to VAT settings.

Note: This option will only appear when the document is empty and doesn't contain any items.

How does that impact financial documents?

If your default setting is Inclusive of VAT, you will see this denoted throughout your financial documents as (Incl. VAT), specifically in the Cost and Total columns, and Subtotal at the bottom of the item list. This lets your clients know that the VAT is already calculated into the item totals they see. They will see a breakdown of the included VAT at the bottom, if you choose to show them this detail in the client view settings.

If your default setting is Exclusive of VAT, the item Cost and Total columns, and Subtotal at the bottom of the item list, will show the client's cost, excluding VAT. Any applicable VAT is calculated and shown in the breakdown at the bottom, then added in the overall Total. Your client will see a breakdown of the subtotal and VAT at the bottom, if you choose to show them this detail in the client view settings.

Set Default VAT Rate Per Project

You can also set default VAT rates on a project basis, allowing you to use a VAT rate other than the company default for all documents in a specified project. To do so, click the Project Details icon on a project overview page, then choose the Project Settings tab at the top. Here you can use the dropdown to select from your existing rates, or create a new one. Make sure to click Save Changes at the bottom when you're done.

This VAT rate will be the default for all new documents in that project, including those created from templates. You can click Clear VAT Rate to revert project documents back to the company default rate.

Set VAT Rates for Estimates

Each line item on your estimate has two VAT-related columns – if you don't see them, you will need to enable them in the Customise Settings at the top of your line items section. You can adjust the VAT Applicable column as needed per item, depending on the item type. Material, Labour, Product, and Service types can be marked VAT Applicable or VAT Not Applicable. Items with the Material & Labour type can be VAT Applicable on Material, Labour, both or neither.

To make changes, click the arrow in the VAT column for the desired line item and a dropdown will appear. Choose the type of VAT rate that applies to the item.

Once you’ve set the VAT Applicability for your line items, you can determine which VAT rate should apply to each line item. By default, it will be the rate that you set at the account level or project level.

To set a different VAT rate on a specific item, click the dropdown in the VAT Rate column on said line item to choose one of the VAT rates saved in your account settings.

If you’re already working on an estimate and you need a VAT rate that doesn’t yet exist in your account, you can create that new VAT rate from within the estimate – just select Create New VAT Rate from the dropdown. The VAT rate will be saved in your account and can be used on future projects and estimates.

Set VAT Rates for Proposals

Each line item on your proposal has two VAT-related columns: VAT Rate and VAT Applicable. If you don't see either, you will need to enable them in the Customise Settings at the top of your line items section. You can adjust the VAT Applicable column as needed as needed from the dropdown: Item, Shipping, both or neither. 

To make changes, click the arrow in the VAT Applicable column for the desired line item and a dropdown will appear. Choose the type of VAT that applies to the item. If neither Item nor Shipping are selected, it will default to None. If both are selected, it will default to "VAT Applicable".

Once you’ve set the VAT Applicability correctly for your line items, you can determine which VAT rate should apply to each line item. By default, it will be the rate that you set at the account level or project level.

To set a different VAT rate on a specific item, click the dropdown in the VAT Rate column on said line item to choose one of the VAT rates saved in your account settings.

If you’re already working on a proposal and you need a VAT rate that doesn’t yet exist in your account, you can create that new VAT rate from within the proposal – just select Create New VAT Rate from the dropdown. The VAT rate will be saved in your account and can be used on future projects and proposals.