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Dealing with VAT on Royal Mail postage costs

I’m afraid I’ve got yet another VAT query :slightly_frowning_face:

According to all of my research Royal Mail postage costs are classed as being “vat exempt”

So why does the printout I receive from the post office clearly state that the charges are “Zero VAT rated”. This appears to be consistently quoted on my receipts whether it is for postage within the UK, within the EU or rest of the world.

It used to be exempt, its now zero rated as from a few years back I believe. Royal mail started charging vat on some business postage so I think now its zero rated for public and 20% for registered businesses.

I may be wrong in my opinion as to why it changed, I just know that it did, if that makes sense.

Royal Mail’s own website says that most of their basic postal services including first and second class post are still exempt (not zero-rated, though the difference on the purchases side is kind of academic anyway), but some others are now standard rated.

It will vary depending on the type of postal service - standard services provided by Royal Mail under its remit as the universal postal provider in the U.K., such as 1st and 2nd class post, are exempt - if they are subject to price and regulatory controls. Some other services which are not subject to such controls may be vatable.

See here https://www.gov.uk/guidance/rates-of-vat-on-different-goods-and-services#printing-postage-publications--books-magazines-and-newspapers and here https://www.gov.uk/guidance/vat-on-postage-delivery-and-direct-marketing-notice-70024 (para 1.4) for the details.

Were you just paying for postage or using a Post Office service such as Drop and Go?

I don’t know if that would technically change it from “exempt” to “zero rated” but it is the first thing that comes to mind.

It makes no difference anyway as I understand it - the accepted wisdom seems to be that both zero rated and exempt purchases should count towards your box 7 total in the same way on a VAT return.

Just as an update.

I went into my local Post Office to post one of our products using the International tracked and signed for service. On the Post Office’s own website it clearly states that this particular service is “exempt” from VAT. However, once again the printed vat invoice clearly stated that this was “Zero VAT”. I queried this with the postmaster who confirmed there is no manual input with regard to VAT required. Their system does it all automatically. Interestingly I was also dropping off a on-line purchase return with a pre-paid return label. My receipt for that transaction clearly showed VAT as “exempt”.

I fully appreciate that this point is mute as both Zero VAT and Exempt have the same impact on my VAT return. Just seems to be very inconsistent that Royal Mail clearly state “exempt” on their website but their system prints out an incorrect VAT invoice quoting “Zero VAT” or am I missing something?

Maybe either their systems cant handle showing exempt as well as zero rated. Perhaps they just mean the literal sense as in zero vat applied.

The wording isn’t great either. I’ve seen their receipts say net amount £x vat £0 gross Inc vat £x.

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