How to deal with discount when invoice has multiple line items and multiple tax rates?

Question

I am stumped at how to work out the tax for an invoice, when discounts are applied to invoices that have multiple line items with multiple tax rates? See my example invoice below:

SomeItemOne(Tax: 20%) - Cost:£2.45 | Qty:1 (Line Sub Total: £2.45) 
SomeItemTwo(Tax: 20%) - Cost:£22.45 | Qty:5 (Line Sub Total: £112.25) 
SomeItemThree(Tax: 10%) - Cost:£68.99 | Qty:4 (Line Sub Total: £275.96) 
SomeItemFour (Tax: 0%) - Cost:£68.99 | Qty:4 (Line Sub Total: £275.96) 

This would give me an invoice breakdown of:

Subtotal: £666.62
Tax (20% of 114.70): £22.94
Tax (10% of 275.96): £27.60
Tax (0% of 275.96): £0
Total: £717.16

I now need to offer a 50% discount on this invoice. How is this calculated with multiple tax rates?

I can't just take 50% off the Subtotal? As I won't be able to correctly calculate the different tax rates?

Answer 1

Apply the discount before you apply the tax (unless your specific tax jurisdiction calls for the tax to be applied to the pre-discount value - NOTE that this would not be normal in the USA/EU). Then calculate the tax normally on the now-discounted pricing.