Record a payment

Work → Payments (or Record payment from an invoice or bill) is for money that moves without going
through your bank feed — cash, cheques, or a transfer you're logging by hand. Choose Money in or Money out,
the amount, and who it's with.

Allocating to invoices and bills

If the contact has open invoices (money in) or open bills (money out), BusyBee Hub lists them so you can allocate the
payment across one or more. Anything left unallocated needs a category — it still counts for tax, it just isn't
settling a specific invoice or bill.

The VAT on money in with nothing allocated

If you're VAT registered, money you record as received that isn't allocated to an invoice (all of it, or what is left after the
invoices you allocate it to) asks which VAT rate it carries: 20%, 5%, 0%, exempt, or No VAT. The amount is taken to include
that VAT. Money that pays an invoice belongs on the invoice: allocate it there. Money recorded with a rate and no invoice counts as a
sale of its own, so if it was also for an invoice that is still open the sale may be counted twice, and a payment can't be allocated
afterwards: delete it and record it again against the invoice. For a deposit on work you will invoice, raise the invoice first and
record the payment against it: recorded before the invoice, the deposit counts as a sale in its own period and the invoice counts it
again later. If that has already happened, the VAT check on the return the invoice falls in says so: delete the payment and record it
again against the invoice, or credit the duplicate.

Choose No VAT only for income outside the scope of VAT, such as a grant, compensation or an overpayment you will refund: it then
reaches no box of your VAT return. A loan, or money you paid into the business yourself, isn't income at all: explain its bank line as
Loan or Capital introduced instead. Any other rate puts the money in your return: on the standard scheme the VAT in it goes in
box 1 and the rest in box 6, and on the flat rate scheme all of it is part of your turnover (box 6) and your flat rate percentage of it
goes in box 1.

Money you recorded this way before BusyBee Hub asked for a rate is listed under Income with no VAT rate on Tax → VAT: choose a
rate for each one. A return you've already sent is corrected by the next one, except for a period you filed with other software or
before your first return here (see Fix a mistake on a VAT return), and a correction above
HMRC's limit is reported to HMRC separately. To change a rate you chose by mistake, delete the payment and record it again.

If you pay money out that gives back money you recorded as received (a refund to a customer who paid you with nothing allocated),
say which receipt it repays in This repays money I recorded as received: the customer is filled in for you, and it takes that
receipt's VAT back out of your VAT return, at the rate you chose for the receipt. A payment out in an income category that names no
receipt lowers your income but takes no VAT out of the return.

An outgoing payment with no bill

Paying a supplier without raising a bill first — a one-off purchase, a subscription, a card payment you're logging
by hand — is deducted as an expense in whatever category you choose, on both cash and accruals basis, the day you
paid it. It's always the gross amount: no VAT is reclaimed on it this way, even if you're VAT-registered, because
there's no VAT rate recorded anywhere to reclaim against.

If you want to reclaim VAT on a purchase, record it as an expense instead (Work → Expenses → New expense), where you
can set the VAT rate and how much of it was for business use. The payment form shows a reminder of this when it
applies to you.

A payment in that isn't income

Choosing an expense category for money coming in — refunding an unallocated overpayment you made, for example —
reduces that expense's box rather than adding to your turnover, mirroring how the money originally went out.

See also Refund an expense for the everyday case of a supplier refunding something you
already recorded as an expense.