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22nd Sept 2010 - VAT on postage next year, how will it affect you?

As of midnight on the 31st January 2011, the rules for VAT on Royal Mail postal services come into effect. Thankfully, this will have minimal effect - if any - on your mailings.

The decision to charge VAT on Royal Mail services follows a legal challenge to the VAT exempt status of Royal Mail services and a ruling by the European Court of Justice on the services that can remain VAT exempt.

Below are a list of the services that remain exempt and a list of the services that will be subject to VAT.

Products that will remain exempt

Inland services
1st and 2nd Class Stamped Mail
1st and 2nd Class Franked Mail
1st and 2nd Class PPI Mail
Special Delivery Next Day Stamps and Franking
Standard Parcels
Recorded Signed For
Redirections
1st and 2nd Class Cleanmail, Cleanmail plus and Cleanmail Advance
1st and 2nd Class Packetpost, Packetsort and Packetpost Returns
1st, 2nd and 3rd Class Mailsort 120, 700 and 1400
1st and 2nd Class Response services
1st and 2nd Class Walksort
1st and 2nd Class Presstream
Sustainable Mail

International services
International Airmail
International Surface Mail
All HM Forces Mail (BFPO)

Access services
Access 1400, 700, 120 OCR and 120 CBC
Access 120 Letter, 120 Large Letter and 120 Packet
Access Walksort

Products that will become subject to VAT

Express and Tracked services
Special Delivery 9.00am Stamp, Franking and Account
Special Delivery Next Day Account
Royal Mail Tracked
Royal Mail Sameday

Catalogues and Magazine services
Big Book
Royal Mail Heavyweight

International services (no VAT will be added for non-EU destinations)
International Redirections
International No Sort
International Format Sort
International Unsorted
International Destination Sort
International Bulk Mail
International Airsure
International Admail and Admail Packets

Unaddressed Mail
Door to Door

Receiving and Managing Mail services
Keepsafe
Timed Delivery
Early Extraction
Early Collect
Selectapost

Other services
Business Mail Secure
Admail
Local Collect
Callers Services
Rural deliveries
Rural Carriage of Goods

Contract services
Presorted Delivery
Mailroom Management
Mailroom consulting services
Royal Mail Relay

Please note that some services are not listed, because the Royal Mail is still assessing if VAT will be required on those services.

For more information, please contact us. Also, please also feel free to subscribe to our e-newsletters, which will keep you updated on the latest developments within the industry.