# Discounts and charges in Peppol: UNCL5189 and 7161 codes

> How to code discounts and charges in a Peppol invoice: the UNCL5189 allowance subset, UNCL7161 charge codes, price-level discounts and the rules that reject them.

- Canonical URL: https://einvoices.uk/news/allowance-charge-reason-codes-peppol
- Published: 21 October 2026 (2026-10-21)
- Last updated: 21 October 2026 (2026-10-21) (not updated since publication)
- Author: Floris Lindenaar, Editor, e-invoicing expert (https://einvoices.uk/authors/floris-lindenaar)
- Publisher: einvoices.uk (https://einvoices.uk)
- Type: Explainer
- Topics: Technical, Validation, Peppol
- Language: en-GB (UK English); covers the United Kingdom

## Sources

- [Allowance reason codes (UNCL5189 subset) – Peppol BIS Billing 3.0](https://docs.peppol.eu/poacc/billing/3.0/codelist/UNCL5189/)
- [Charge reason code (UNCL7161) – Peppol BIS Billing 3.0](https://docs.peppol.eu/poacc/billing/3.0/codelist/UNCL7161/)
- [Rules for Peppol BIS 3.0 Billing](https://docs.peppol.eu/poacc/billing/3.0/rules/ubl-peppol/)
- [CEN-EN16931-UBL.sch (validation artefacts 1.3.16, Peppol BIS Billing 3.0.21)](https://docs.peppol.eu/poacc/billing/3.0/files/CEN-EN16931-UBL.sch)
- [VAT guide (VAT Notice 700), 7.3.2 Discounts – GOV.UK](https://www.gov.uk/guidance/vat-guide-notice-700)

## Key points

- Allowance (discount) reason codes are limited to a 19-code subset of UNCL5189; ZZZ is not in it.
- Charge reason codes use the full UNCL7161 list, for example FC freight, DL delivery, PC packing and ZZZ mutually defined.
- Every allowance or charge needs a reason text or a reason code, and document-level ones need their own VAT category.
- The rules that require code and text to match (BR-CO-05 to BR-CO-08) have a test of true(), so they never fire.
- Price-level allowances are allowed but price-level charges are not (PEPPOL-EN16931-R044).

---

In a Peppol invoice, a discount is an **allowance** (`cbc:ChargeIndicator` = `false`) and a surcharge such as freight is a **charge** (`true`). Allowance reason codes must come from a short Peppol subset of **UNCL5189**, with **95 (Discount)** as the general-purpose code. Charge reason codes come from the full **UNCL7161** list, such as **FC (Freight service)** or **DL (Delivery)**. Either way, you may send reason text instead of a code.

## Three levels of discount and charge

| Level | UBL location | Allowance | Charge | Affects |
|---|---|---|---|---|
| Document | `/Invoice/cac:AllowanceCharge` | BG-20 | BG-21 | BT-107 / BT-108, VAT breakdown |
| Line | `cac:InvoiceLine/cac:AllowanceCharge` | BG-27 | BG-28 | Line net amount BT-131 |
| Price | `cac:Price/cac:AllowanceCharge` | BT-147 (price discount) | Not allowed | Net unit price BT-146 |

## Allowance codes: the Peppol subset of UNCL5189

PEPPOL-EN16931-CL002: "Reason code MUST be according to subset of UNCL 5189 D.16B." BR-CL-19 enforces the same list. The 19 allowed codes, with names from the Peppol code list:

| Code | Name | Code | Name |
|---|---|---|---|
| 41 | Bonus for works ahead of schedule | 71 | Point of sales threshold allowance |
| 42 | Other bonus | 88 | Material surcharge/deduction |
| 60 | Manufacturer's consumer discount | **95** | **Discount** |
| 62 | Due to military status | 100 | Special rebate |
| 63 | Due to work accident | 102 | Fixed long term |
| 64 | Special agreement | 103 | Temporary |
| 65 | Production error discount | 104 | Standard |
| 66 | New outlet discount | 105 | Yearly turnover |
| 67 | Sample discount | | |
| 68 | End-of-range discount | | |
| 70 | Incoterm discount | | |

There is **no ZZZ** for allowances. Our test with `ZZZ` on a discount failed both BR-CL-19 and CL002. If nothing fits, send text only.

## Charge codes: UNCL7161

PEPPOL-EN16931-CL003: "Reason code MUST be according to UNCL 7161 D.16B." The list is long. Codes UK businesses commonly need:

| Code | Name |
|---|---|
| FC | Freight service |
| DL | Delivery |
| SAA | Shipping and handling |
| PC | Packing |
| ABL | Additional packaging |
| SH | Special handling |
| AEO | Collection and recycling |
| FI | Financing |
| IS | Invoicing |
| ADR | Other services |
| ABK | Miscellaneous |
| ZZZ | Mutually defined |

Using an allowance code such as 95 on a charge failed BR-CL-20 and CL003 in our tests.

## Rules every allowance and charge must pass

- **Reason:** BR-33 (allowance) and BR-38 (charge) require a reason text or a reason code. Our test with neither failed BR-33 and BR-CO-21.
- **VAT category:** BR-32: "Each Document level allowance (BG-20) shall have a Document level allowance VAT category code (BT-95)." BR-37 is the same for charges. Without one, our test also failed BR-S-08, because the VAT breakdown no longer added up.
- **Percentages:** R041 and R042 say base amount and percentage must come together. R040: "Allowance/charge amount must equal base amount * percentage/100 if base amount and percentage exists", with a tolerance of 0.02.
- **Totals:** document-level allowances and charges feed BT-107 and BT-108 (`AllowanceTotalAmount`, `ChargeTotalAmount`) and the VAT breakdown for their category and rate.

## The rules that never fire

BR-CO-05 to BR-CO-08 say the reason code and reason text "shall indicate the same type". They are published as fatal, but in the 3.0.21 artefacts their test is `true()`, so they always pass. We sent code `95` (Discount) with the text "Freight charge" and the invoice passed. Your receiver's AP system may still be confused, so keep code and text consistent.

## A valid example

A 10% discount on £500 of goods plus £25 freight, both standard rated:

```xml
<cac:AllowanceCharge>
  <cbc:ChargeIndicator>false</cbc:ChargeIndicator>
  <cbc:AllowanceChargeReasonCode>95</cbc:AllowanceChargeReasonCode>
  <cbc:AllowanceChargeReason>Discount</cbc:AllowanceChargeReason>
  <cbc:MultiplierFactorNumeric>10</cbc:MultiplierFactorNumeric>
  <cbc:Amount currencyID="GBP">50.00</cbc:Amount>
  <cbc:BaseAmount currencyID="GBP">500.00</cbc:BaseAmount>
  <cac:TaxCategory>
    <cbc:ID>S</cbc:ID>
    <cbc:Percent>20</cbc:Percent>
    <cac:TaxScheme><cbc:ID>VAT</cbc:ID></cac:TaxScheme>
  </cac:TaxCategory>
</cac:AllowanceCharge>
<cac:AllowanceCharge>
  <cbc:ChargeIndicator>true</cbc:ChargeIndicator>
  <cbc:AllowanceChargeReasonCode>FC</cbc:AllowanceChargeReasonCode>
  <cbc:AllowanceChargeReason>Freight</cbc:AllowanceChargeReason>
  <cbc:Amount currencyID="GBP">25.00</cbc:Amount>
  <cac:TaxCategory>
    <cbc:ID>S</cbc:ID>
    <cbc:Percent>20</cbc:Percent>
    <cac:TaxScheme><cbc:ID>VAT</cbc:ID></cac:TaxScheme>
  </cac:TaxCategory>
</cac:AllowanceCharge>
```

With one £500 line, the totals are: LineExtensionAmount 500.00, AllowanceTotalAmount 50.00, ChargeTotalAmount 25.00, TaxExclusiveAmount 475.00, and a single 20% breakdown with TaxableAmount 475.00 and VAT 95.00. This passed the BIS 3.0.21 rules.

The document-level elements go after `cac:PaymentTerms` and before `cac:TaxTotal`. UBL element order is enforced by the schema.

## Price-level discounts

A trade discount on the unit price is shown as gross price minus a price allowance:

```xml
<cac:Price>
  <cbc:PriceAmount currencyID="GBP">45.00</cbc:PriceAmount>
  <cac:AllowanceCharge>
    <cbc:ChargeIndicator>false</cbc:ChargeIndicator>
    <cbc:Amount currencyID="GBP">5.00</cbc:Amount>
    <cbc:BaseAmount currencyID="GBP">50.00</cbc:BaseAmount>
  </cac:AllowanceCharge>
</cac:Price>
```

Two Peppol rules apply. R044: "Charge on price level is NOT allowed. Only value 'false' allowed." R046: "Item net price MUST equal (Gross price - Allowance amount) when gross price is provided." Changing the allowance to 4.00 failed R046, and changing the indicator to `true` failed R044. BR-27 also says the net price "shall NOT be negative". For a line total that does not equal quantity × price, see PEPPOL-EN16931-R120.

## UK VAT: which discounts reduce the taxable amount

Peppol only checks the arithmetic. HMRC decides the VAT value (VAT Notice 700, 7.3.2):

- **Unconditional discounts:** "the tax value is based on the discounted amount". Send as an allowance on the invoice.
- **Prompt payment discounts:** "the tax value is based on the actual amount paid". This is not an allowance on the invoice; it is usually stated in the payment terms or handled by credit note.
- **Contingent discounts** (for example, volume rebates earned later): VAT is on the full amount at first, and "you can adjust the amount of tax by issuing a credit note". See [credit notes in Peppol](https://einvoices.uk/news/credit-notes-peppol-uk).

If a document-level discount covers lines at different VAT rates, split it into one allowance per rate. One allowance can only carry one VAT category and rate. For delivery on mixed-rate invoices, HMRC's rules on whether delivery is a separate supply apply first.

## What to do now

- Map each ERP discount and surcharge type to a code from the right list, or to text only.
- Give every document-level allowance and charge its own VAT category and rate.
- Never put a surcharge at price level.
- Test with the [e-invoice validator](https://einvoices.uk/tools/e-invoice-validator).

Related: [UK VAT category codes in Peppol](https://einvoices.uk/news/uk-vat-category-codes-peppol), VAT rounding in Peppol.

## Frequently asked questions

### What is the Peppol reason code for a discount?

95 (Discount) is the general code in the UNCL5189 subset Peppol allows. Others include 100 Special rebate, 104 Standard and 105 Yearly turnover. You can also send reason text only, without a code.

### Can I use ZZZ for a discount?

No. ZZZ (Mutually defined) is in the charge list UNCL7161 but not in the allowance subset of UNCL5189. Using it on an allowance fails BR-CL-19 and PEPPOL-EN16931-CL002.

### What is the code for a delivery charge?

DL (Delivery) or FC (Freight service) from UNCL7161. SAA is Shipping and handling. Each document-level charge also needs a VAT category and rate.

### Can I put a surcharge on the unit price?

No. PEPPOL-EN16931-R044 allows only allowances (ChargeIndicator false) at price level. Put the surcharge as a line charge or document-level charge instead.

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How to cite: "Discounts and charges in Peppol: UNCL5189 and 7161 codes", einvoices.uk, 21 October 2026, https://einvoices.uk/news/allowance-charge-reason-codes-peppol

einvoices.uk is an independent publication and is not affiliated with HMRC or the UK Government. Nothing here is tax advice; check the sources and official GOV.UK guidance before acting.