I have transactions that come through that I charge VAT on.
However, inclusive of this amount is postage. There are a large number of them.
I have the separate postage calculation for the quarter, but cannot separate each transaction. I wanted to ask where I can deduct this postage amount clearly from the VAT calculation?
Why do you need to deduct anything? Postage is vat exempt when the Royal Mail sells it to you, but my understanding is that delivery charges you make to your customers generally attract VAT at the same rate as the items you’re delivering.
Because of the exemption.
Item is £20, VAT £4 Postage £6
Total charged and logged £30.
The VAT calculation will show £25 sale £5 VAT as the postage is mixed with the £30 amount however.
I need to deduct the postage from the return somehow.
Are you just using the VAT bridging module?
Are you sure you shouldn’t be charging your customers VAT on the postage as well and have you had this confirmed by an accountant? Like I say above, Royal Mail sell their postage to you as VAT exempt but you have to charge VAT on delivery charges that you charge out to your customers unless the goods themselves are zero rated or the charges meet the very specific criteria to be treated as disbursements.
(Essentially, if delivery is a required part of the transaction - you don’t offer an option to collect the goods for free instead of having them posted - then it’s one supply of “delivered goods” at the vat rate that would apply to those goods on their own. If delivery is an optional extra then you must charge standard rate VAT on the postage even if the goods were zero rated, and even if you were not charged VAT when you paid the postage company or bought the stamps)
Delivery charges should carry vat. Royal mail is zero rated. But a business charges vat.
Than all, you learn every day so thank you for this - I will keep it how it is.
And going forward you should show the correct VAT on your customer invoices - either put your postage charge up to £7.20 (£6+VAT) or take the hit and express the £6 as £5+VAT from now on.
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