Xero Chart of Accounts Cheat Sheet

Use 493 Travel - National for UK hotel stays on business trips, or 494 Travel - International for trips abroad. This covers accommodation, trains, flights and taxis. Meals while travelling for business can go here too, rather than under entertainment.

Use 424 Entertainment - 0%. Client hospitality is not tax deductible and you cannot reclaim the VAT, which is why it needs its own code. Keeping it separate from staff entertainment makes the year-end adjustments straightforward.

Use 420 Entertainment - 100% business. Annual staff events are fully deductible provided the total cost stays within HMRC's £150 per head annual exemption. Go over that limit and the whole amount becomes a taxable benefit for your employees, not just the excess.

Use 420 Entertainment - 100% business. Small gifts usually qualify as trivial benefits if they cost £50 or less, aren't cash or a cash voucher, and aren't a reward for work. Anything outside those rules may need reporting as a benefit in kind, so check with us first.

Use 404 Bank Fees. Payment processor charges work the same way as bank charges for bookkeeping purposes. If you reconcile the gross sale and the fee separately, code the fee line here rather than netting it off against sales.

Use 463 IT Software and Consumables. The same code covers software subscriptions like Microsoft 365, Adobe and Canva, plus antivirus and cloud storage.

Use 485 Subscriptions, though some businesses prefer 463 IT Software and Consumables. Either works, just pick one and stay consistent.

Use 485 Subscriptions. This covers trade body memberships, professional institutes and industry magazines. Note that only subscriptions on HMRC's approved list of professional bodies are tax deductible.

Use 489 Telephone & Internet if the contract is in the business name. If you're paying a personal contract through the business, the treatment is different and worth a conversation with us before you code it.

For furniture you expect to use for years, use 764 Plant & Machinery so it sits on the balance sheet as an asset. Low-value items can go straight to expenses.

Low-value tools you'll replace regularly can be expensed. Longer-lasting equipment belongs in 764 Plant & Machinery as a fixed asset.

Genuine protective clothing and branded uniforms are allowable business expenses. The default chart has no dedicated code, so most businesses add a custom one or use 429 General Expenses. Everyday clothing is not deductible, even if you only wear it for work.

Water for business premises has no dedicated default code. Most businesses either add a custom Water Rates code or use 465 Rates.

Use 418 Charitable and Political. Donations to registered charities are usually deductible for corporation tax; political donations are not, so keep the distinction clear in the transaction description.

Use 477 Salaries for your employees, processed through payroll. Subcontractor labour is different: use 320 Direct Wages or 321 Subcontractors when the work relates directly to delivering sales.

Don't reach for an expense code. Code the refund to the same account as the original sale, usually 200 Sales Revenue, so your income figure nets off correctly. Raising a credit note against the original invoice keeps everything tidy.

None. Transfers between your own accounts aren't income or expenditure, so don't code them to the chart of accounts at all. Use Xero's bank transfer function when reconciling and both sides will match without touching your profit and loss.

Use 820 VAT. The payment clears the liability that built up from the VAT on your sales and purchases. It should never touch an expense code, a common error that overstates costs and understates the VAT balance.

Use 835 Directors' Loan Account. Money you put in and money you take out (outside salary and dividends) both run through this code. Keep an eye on the balance: an overdrawn director's loan account can trigger a tax charge.

Use 270 Interest Income. It's taxable income but sits outside your trading revenue, which is why it has its own code rather than going to 200 Sales Revenue.