Royal Mail account charges VAT?

[Lampre92]

Hi all, currently we ship around 900 parcels a month through eBay, all via Royal Mail either 1st class large letter OR 1st class small parcel.

We are a new business and our accountant is just filing our first VAT return where it has become apparent the shipping is VAT exempt. I have done some research and it seems even the Royal Mail website claims the services we use are exempt however in a recent email exchange with a Royal Mail business manager he claims VAT is charged if I have a Royal Mail business account, can someone confirm this?

The obvious answer is to email him which I have done but still awaiting reply and I would really like to get moved over to a Royal Mail account if it means we can claim back VAT.

Royal Mail website states:

Account manager email:

 

[BMX90]

What is your business?

 

[Solve My Problem]

They will supply a VAT invoice if its being charged.

We have an OBA business account and pay VAT on first and second.

 

[Lampre92]

They will supply a VAT invoice if its being charged.

We have an OBA business account and pay VAT on first and second.

Thank you. Gutted I didn't click onto this earlier, I thought buying it through eBay would also let me claim back the VAT but it appears not.

 

[LPB 123]

1st class and 2nd class are VAT exempt.

Most businesses will use Royal Mail 24 and Royal Mail 48, which are the business equivalent of 1st and 2nd class. Those services charge VAT and are cheaper than 1st and 2nd class if you're VAT registered.

 

[Lampre92]

1st class and 2nd class are VAT exempt.

Most businesses will use Royal Mail 24 and Royal Mail 48, which are the business equivalent of 1st and 2nd class. Those services charge VAT and are cheaper than 1st and 2nd class if you're VAT registered.

That makes more sense and it explains the account managers email referring to them as 24 & 48 instead of 1st & 2nd. Do you know if the service for the customer is better receiving a 24 parcel vs 1st class?

 

[LPB 123]

That makes more sense and it explains the account managers email referring to them as 24 & 48 instead of 1st & 2nd. Do you know if the service for the customer is better receiving a 24 parcel vs 1st class?

As far as I'm aware the service is exactly the same, I think they process them the same once it reaches the mail centre

 

[Solve My Problem]

1st class and 2nd class are VAT exempt.

Most businesses will use Royal Mail 24 and Royal Mail 48, which are the business equivalent of 1st and 2nd class. Those services charge VAT and are cheaper than 1st and 2nd class if you're VAT registered.

Not as a business

1st Class mail (STL) is charged with VAT on an OBA account

As a non business purchase there is no VAT, I would assume that eBay is considered business, but if they are not I would assume the prices should reflect a net charge

1.3 Postal charges and VAT exemptions​

Postal services provided by the Royal Mail Group Limited under its remit as the universal postal service provider in the UK are exempt from VAT if they’re subject to price and regulatory control. This exemption does not extend to similar services provided by the Royal Mail or other suppliers.

 

[LPB 123]

Not as a business

1st Class mail (STL) is charged with VAT on an OBA account

As a non business purchase there is no VAT, I would assume that eBay is considered business, but if they are not I would assume the prices should reflect a net charge

1.3 Postal charges and VAT exemptions​

Postal services provided by the Royal Mail Group Limited under its remit as the universal postal service provider in the UK are exempt from VAT if they’re subject to price and regulatory control. This exemption does not extend to similar services provided by the Royal Mail or other suppliers.

I've never heard of STL to be honest so not aware of that.

Our business rate cards only show BPL (1st class and second class) which are VAT exempt.

And then CRL (Royal Mail 24 and Royal Mail 48) which have VAT.

I'd imagine it would be cheaper for OP to use CRL but no idea the charges on STL as I've never seen it before.

 

[Solve My Problem]

I've never heard of STL to be honest so not aware of that.

Our business rate cards only show BPL (1st class and second class) which are VAT exempt.

And then CRL (Royal Mail 24 and Royal Mail 48) which have VAT.

I'd imagine it would be cheaper for OP to use CRL but no idea the charges on STL as I've never seen it before.

Our OBA account shows
1kg parcel (small if given an option)
BPL £3.95 GBP - NO VAT
CRL £3.58 GBP + VAT
STL £4.55 GBP + VAT

 

[DefinitelyMaybeUK]

Account manager email:

Looks like this was a while back? as fuel surcharge on 24 & 48 is now 6% from 14th March - still better than 1st & 2nd class is you're VAT registered though, see:

https://www.royalmail.com/business/mail/surcharges

 

[Lampre92]

Looks like this was a while back? as fuel surcharge on 24 & 48 is now 6% from 14th March - still better than 1st & 2nd class is you're VAT registered though, see:

https://www.royalmail.com/business/mail/surcharges

Yeah it was a while back, eBay postage cost was a few pennies less so we stayed with eBay as it was easier for us at the time, if we had known we couldn't claim back VAT on eBay postage we would have moved.... Live and learn!

 

[chickenlady]

The different RM codes also give you different levels of compensation and delivery notifications. You can integrate your ebay account to RM Click & Drop with OBA - it is as quick and easy as using ebay's postage but you get to choose the service. RM24/48 coded CRL will get no compensation but you are supposed to get a scan on delivery which ebay accept as proof of delivery. You also get averaging of weights which I find beneficial but not everyone will. You can reclaim the VAT.
It is worth talking to RM account manager about what is the best service for your business - I mainly sell low value items so I don't use the compensation. If I send something of particularly high value, I use a different code so I get the compensation cover I require (or I use the Tracked 48/24 service which I get from the non-business Click & Drop which gives £100 compensation). Tracked 48/24 is coded differently and more expensive again.

https://www.royalmail.com/sites/royalmail.com/files/2022-03/royal-mail-business-price-guide-april-2022.pdf

 

[kulture]

I used RM 48. The two major benefits being the proof of delivery and the average weight. The average weight was enormously good for me because I had a variety of weights and several parcels over 2kg, but so long as the average weight of the sack was under 2kg then all the parcels were charged at the sub 2kg rate. Saved pounds every day

 

[paulears]

If you select the UPS option on ebay, for my parcels it is 4.99 and mentions inc VAT, but the invoice from PAC says VAT is £0. The 4.99 is better than the direct UPS price which is £12!