UK Charity Chart of Accounts for Xero with VAT Codes (Free)

Charity finance is where ordinary VAT logic stops working. A charity mixes grant-funded work it gives away with shop sales, tickets, and services it charges for, and that mix decides what VAT it can recover and whether it must register at all. A standard business chart, built around an owner and a single taxable trade, gets all of this wrong. This is a UK charity chart of accounts built for Xero, with funds accounting, business and non-business income split, and the charity reliefs coded. It comes as a readable reference CSV and a ready-to-import CSV.

Funds, not owner equity

The first change is structural. A charity has no proprietor drawing profits, so the chart replaces the owner equity and drawings accounts with unrestricted funds and restricted funds in the equity section. Unrestricted funds are general money available for any charitable purpose; restricted funds are tied by the donor to a specific use. Funds accounting is the model trustees and the SORP expect, and starting the equity section there sets the rest of the ledger up to report against it.

Business versus non-business income

The question that governs everything in charity VAT is not “is there VAT on this” but “what activity does it support”. The chart keeps grants and donations as a separate income account coded No VAT, because freely given funding is non-business income, outside the scope of VAT, not a supply for consideration. Charitable trading income is the opposite: shop sales, event tickets, and consultancy are business supplies, so that account defaults to 20% (VAT on Income) with zero-rated and exempt income listed as the alternatives that apply to particular supplies. Coding income to the right one of these is what makes the recovery position calculable.

The reliefs that remove irrecoverable VAT

Charities get specific purchase reliefs, and the chart codes for them. Advertising and marketing defaults to Zero Rated Expenses, because advertising supplied to an eligible charity can be zero-rated on an eligibility declaration to the supplier, with standard and the reverse charge listed for overseas platforms and non-qualifying spend. For a charity that cannot recover input VAT, a relief that stops VAT being charged in the first place is more valuable than a reclaim, so securing it at the point of purchase matters. Keep the declarations filed with the invoices, because the relief stands or falls on that evidence.

Programme costs and apportionment

The chart adds charitable programme costs and fundraising costs as their own accounts, with programme costs noted as non-business so the input VAT on them is not assumed recoverable. Most charities are partly exempt and must apportion overheads across taxable, exempt, and non-business use. The chart gives that apportionment clean inputs to work from; it does not perform the calculation, which is a specialist exercise.

How to use it

1. Open the reference CSV and adapt the account names to the charity, keeping the fund, income, and programme accounts.
2. In Xero go to Accounting, then Chart of accounts, then Import, and upload the CSV into a demo organisation first.
3. Confirm the zero, exempt, and standard rates exist in your org.
4. Set up tracking categories for restricted funds if you report fund balances in Xero.

The recurring work is a high volume of invoices across very different activities, where evidence matters as much as keying:

• Hubdoc collects recurring supplier bills into the file.
• ExpenseFlow reads each receipt and supplier invoice, holds the source image with the transaction including the zero-rating declarations, flags overseas-supplier invoices carrying no UK VAT, and flags costs coded to a non-business activity as not assumable as fully recoverable, then posts each into Xero against the right account.
• Dext applies supplier rules for repeat costs.

For business versus non-business, partial exemption, and the reliefs in full, see the UK charity expenses guide. On QuickBooks instead? See the UK charity chart of accounts for QuickBooks. For the codes, see the UK VAT codes in Xero reference.