Hi,

I’ve carried out further testing to isolate this issue more clearly and wanted to provide some additional context.

Background on setup

This website uses a mix of WooCommerce product types:

• Standard simple/variable products (e.g. AppGuard licences)
• Uncanny Owl LearnDash Group Licence products (custom product type: WC_Product_License) used for multi-seat course purchases
• WPC Smart Bundles (woosb) to combine these into packaged offerings (Protect Packages)

All products are set to:

• Tax status: taxable
• Tax class: standard (UK VAT 20%)
• WooCommerce setting: prices entered exclusive of tax

Control tests (working correctly)

We tested products outside of bundles:

• Standard product (£1,795) → VAT correctly calculated (£359)
• Group licence product (£10.80 × 20 seats = £216) → VAT correctly calculated (£43.20)

So VAT is working correctly for both standard Woo products and Uncanny licence products independently.

Issue occurs only within Smart Bundles

We tested a Smart Bundle using:

• Auto-calculated bundle pricing (enabled or fixed pricing disabled, if you'd prefer)
• A fixed monetary discount (£897) applied 
• Resulting displayed bundle price: £2,600

When added to cart:

• Subtotal: £2,600.00 ✅
• VAT: £699.40 ❌
• Total: £3,299.40

Expected result:

• VAT should be £520.00 (20% of £2,600)
• Total should be £3,120.00

Key finding

£699.40 is exactly 20% of the pre-discount bundle value (£3,497).

This indicates that:

VAT is being calculated on the pre-discount bundle total, while the discount is only affecting the displayed subtotal.

So:

• Subtotal reflects discount ✅
• Taxable amount does NOT reflect discount ❌

Summary

• VAT works correctly for individual products (including Uncanny licence products)
• VAT becomes incorrect only when using Smart Bundles with discount pricing
• The issue appears to be that bundle discounts are not reducing the taxable amount

Question

Is this expected behaviour for Smart Bundles when using:

• auto-calculated pricing
• with a monetary discount applied

Or is there a setting / filter available to ensure that:

VAT is calculated based on the discounted bundle price, not the pre-discount total?

Happy to provide further examples or access if needed.

Thanks in advance for your help.

Hi,

Just to close the loop on this, I’ve managed to identify the root cause and a working approach.

The issue with VAT calculation appears to be directly related to using fixed (£) discounts within Smart Bundles, where VAT is calculated on the pre-discount value rather than the discounted total.

I came across this thread which explains the behaviour and aligns exactly with what I was seeing:
https://wordpress.org/support/topic/issue-with-vat-calculation-for-bundled-products/

Switching to percentage-based discounts resolves the issue, as VAT is then calculated correctly on the adjusted bundle price.

It would have been really helpful to be pointed in this direction earlier, as this ended up taking quite a bit of time to isolate through testing.

Hopefully this helps others running into the same issue.