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
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
Recorded Signed For
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
International Surface Mail
All HM Forces Mail (BFPO)
Access 1400, 700, 120 OCR and 120 CBC
Access 120 Letter, 120 Large Letter and 120 Packet
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
Royal Mail Heavyweight
International services (no VAT will be added for non-EU destinations)
International No Sort
International Format Sort
International Destination Sort
International Bulk Mail
International Admail and Admail Packets
Door to Door
Receiving and Managing Mail services
Business Mail Secure
Rural Carriage of Goods
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.