SumUp ↔ Xero (UK): bullet‑proof reconciliation and VAT on fees for trades

UK plumbing, electrical and HVAC firms love SumUp for quick card payments on site. But the Xero posting and reconciliation can get messy: fees netted off, daily payouts, refunds, and questions about whether there’s VAT on the fees. This guide gives you a clean, UK‑specific setup that reconciles first time and keeps your VAT return right.

Who this is for

• UK trades (plumbing, electrical, HVAC, roofing, landscaping) taking in‑person card payments with SumUp
• Owners, office admins and bookkeepers reconciling in Xero

TL;DR

• Create a SumUp Clearing account in Xero. Post gross sales there; post fees to Merchant/Bank charges; transfer the net payout to your real bank.
• Use VAT‑coded sales in Xero (20%, 5%, 0%, Exempt) that match what you sell. Let the SumUp → Xero integration map VAT per product/rate where available.
• For VAT on SumUp fees: use the monthly SumUp tax invoice to decide treatment. Many UK accountants treat SumUp fees as reverse‑charged services (supplier outside UK). Check your invoice wording and follow your accountant’s advice.

Prerequisites and references

• SumUp to Xero integration overview (Xero App Store): daily sales invoices by VAT rate and fee bills; creates a “SumUp Clearing” account. Helpful if you’re using SumUp’s official connector. https://apps.xero.com/uk/function/payments/app/sumup-accounting-integration
• SumUp POS/Xero mappings background: Xero tax codes shared to SumUp POS; map during setup. https://apps.xero.com/uk/collection/cashflow-improve-sales/app/sumup-pos
• SumUp: Export payment data to accounting. https://www.sumup.com/en-gb/business-guide/exporting-payment-data-to-your-accounting-software/
• Practitioner debate on VAT for Stripe‑like fees (principles similar): https://www.accountingweb.co.uk/any-answers/is-there-vat-on-stripe-fees

Recommended UK setup in Xero (10 minutes)

1. Create a clearing account

• Accounting → Bank accounts → Add Bank Account → Add it anyway → Name: “SumUp Clearing” (Bank account type). Don’t connect a feed.

2. Set up chart of accounts for fees

• Create or confirm an Expense account: “Merchant fees” (code e.g., 430) with tax treatment “No VAT” by default (you’ll override per bill if reverse charge applies).

3. Connect SumUp (if using the app)

• In the SumUp → Xero app, map products/categories to Xero revenue accounts and VAT rates (20%, 5%, 0%/Exempt) appropriate for your services/materials.
• Ensure payouts post to SumUp Clearing. Fees will come in as Bills from SumUp.

4. Bank rule for payouts

• When a SumUp payout hits your real bank, set a bank rule to “Transfer to SumUp Clearing”. This clears the balance once fees and sales are posted.

Daily posting flow (with the SumUp app)

• Sales: app posts a daily invoice into Xero, split by VAT rate. Allocate to SumUp Clearing when paid by SumUp.
• Fees: app posts a Bill for the day’s fees to Merchant fees.
• Payout: bank feed shows the net amount; reconcile as a Transfer from SumUp Clearing to your real bank.
• Result: SumUp Clearing should trend to zero after each payout cycle (allow for timing delays if payouts span days).

Manual method (no app)

• Sales: create a daily Sales invoice (Customer: “SumUp Daily Sales”) with lines grouped by VAT rate (20%, 5%, 0%, Exempt). Receive payment to SumUp Clearing.
• Fees: post a Bill from Supplier “SumUp” for the day/month fees to Merchant fees. If your SumUp tax invoice indicates reverse charge, code with the appropriate reverse charge tax code per your accountant’s guidance.
• Payout: match the bank line as a Transfer from SumUp Clearing.

Example journal logic

Sales (gross) Dr SumUp Clearing
Sales (net VAT) Cr Sales 20% / 5% / 0% / Exempt
VAT Output Cr VAT Control
Fees Dr Merchant Fees
Payable to SumUp/clearing Cr SumUp Clearing
Bank payout Dr Business Bank
 Cr SumUp Clearing

Refunds and chargebacks

• Refund: create a Credit Note against the original daily sales invoice using the same VAT code. Refund payment from SumUp Clearing. The eventual bank outflow is a Transfer to SumUp Clearing.
• Chargeback: post the chargeback fee to Merchant fees and the reversal against the original sales; clear via the clearing account.

VAT on SumUp fees (UK)

• Check SumUp’s monthly tax invoice for your entity: does it state reverse charge? If yes, many UK businesses apply a reverse charge VAT code in Xero on the fee bill. This usually nets to zero VAT due if you’re fully taxable but must be reported on the VAT return.
• If your accountant treats fees as exempt financial services instead, use an Exempt/No VAT code on the bill. Always follow your accountant’s advice and keep the invoices on file for MTD.

Troubleshooting

• Clearing account doesn’t zero: check date ranges. Payouts may include multiple days; ensure all daily invoices and fee bills are posted before transferring.
• Wrong VAT on sales: correct the VAT mapping in the SumUp app or adjust the daily invoice lines before approval.
• Duplicate sales: avoid posting from both SumUp app and manual CSV at the same time; pick one method.

Handy links

• SumUp Accounting Integration (Xero App Store): https://apps.xero.com/uk/function/payments/app/sumup-accounting-integration
• SumUp POS (Goodtill) mapping: https://apps.xero.com/uk/collection/cashflow-improve-sales/app/sumup-pos
• SumUp export guide: https://www.sumup.com/en-gb/business-guide/exporting-payment-data-to-your-accounting-software/
• AccountingWEB: VAT on processor fees: https://www.accountingweb.co.uk/any-answers/is-there-vat-on-stripe-fees

Related TrainAR Academy articles:

• Zettle to Xero UK: how to reconcile daily sales, fees and payouts with a clearing account
• Square to Xero UK: daily sales, fees and payouts using the Square Balance clearing account
• GoCardless to Xero UK how to reconcile payouts properly with a clearing account and get VAT on fees right

Logos (for quick recognition)

What’s new for SumUp in 2025–2026

SumUp has added some handy tools for hospitality and service businesses, plus some new financial options:

• Kitchen Display System (KDS): if you run a café or quick-service site, KDS replaces paper order tickets and gives kitchen staff a real-time view of all incoming orders, reducing mistakes and speeding up service.
• Priority Support: 24/7 live support access for Plus merchants or complex setups. Fast-track for urgent issues and unlimited device warranty now available in the UK, Ireland, France, Germany and others.
• SumUp Solo terminal: the newest card reader processes payments in under 3 seconds (cuts queue time), supports pre-set prices and full product catalog management on device, and has integrated tipping.
• Cash deposits & local IBANs: you can now deposit cash directly through the SumUp app in the UK (and France, Italy, Spain). Local IBANs start rolling out in Italy early 2026 to reduce friction with non-local accounts.
• Cash Advance: flexible funding now available in the UK, Germany, France, Ireland, Netherlands, Brazil, and expanding to Spain, Poland, Belgium and Italy soon.

For Xero reconciliation, the daily sales posting and fee treatment stay the same. These updates just give you more payment options on site and faster settlement if you want it.

Short video: overview of UK VAT, SumUp and Xero

A light intro to how SumUp and Xero sit alongside VAT and MTD for UK trades.