VAT on Royal Mail Postage

[the_hugmeister]

Hello,

As a VAT Registered Business we use Royal Mail First Class using the Online Business Account Code "CRL" for Packetpost.

Royal Mail then charges VAT on this - am I then supposed to charge the customer VAT also?

E.G.

If I charge £4 postage on an item for delivery

and RM charges £2.63 inc VAT on an item, how would I break that up for VAT (if needed)

 

[mconridge]

You should always have been charging VAT on the delivery charge you charge the customer! If you charge the customer £4.00 delivery that is classified as a 'service' and thus is liable for VAT. If you've not been charging VAT on the delivery then you are in for a big VAT payment!

The fact that the Royal Mail now charges VAT makes no difference on what you charge the customer.

 

[the_hugmeister]

Hello, Thank you for the quick repy!

I Have only just gone to VAT Registered.

My accountant advised

[FONT=&quot]Standard Royal Mail services including 1st and 2nd class stamps and franking charges as well as Standard Parcels remain exempt from VAT, which is why you do not yourself charge VAT on them.[/FONT]


but I was confused as to the issue with first class stamps and Packetpost.

 

[talkinpeace]

Be very careful about reclaiming VAT on Royal mail : packet post has VAT on it, letter post does not.

 

[kulture]

Hello, Thank you for the quick repy!

I Have only just gone to VAT Registered.

My accountant advised

[FONT=&quot]Standard Royal Mail services including 1st and 2nd class stamps and franking charges as well as Standard Parcels remain exempt from VAT, which is why you do not yourself charge VAT on them.[/FONT]


but I was confused as to the issue with first class stamps and Packetpost.

What are you posting? If you are selling a product and posting it then assuming you are VAT registered then you should charge VAT on the postage. The only exception is is you are posting a zero rated item.

see http://customs.hmrc.gov.uk/channels...HMCE_CL_000114&propertyType=document#P34_2182

 

[talkinpeace]

Your accountant is wrong unless, as kulture says, the contents of the parcel are entirely zero rated or exempt
a very few items are 5% VAT and the postage can be charged at the same rate as the contents.

 

[the_hugmeister]

Hello I post clothing, so the children's clothing is VAT free.

so for VAT items the post i charge would be £4


£3.20 + £.8 VAT

 

[kulture]

If the ENTIRE contents is zero rated (i.e. books or in your case children's clothing) then you charge VAT on the postage at the zero rate.

I am certain however that HMRC would not object if you charged VAT at 20% on postage regardless of content, so long as you paid them this.

 

[kulture]

I would check your sums however. If you charge £4.00 postage, including VAT at 20% then this is 20% of the excluding VAT price. So the EX VAT price would be £3.33 and the VAT would be £0.67, giving a total price of £4.00. Do not overpay VAT.

 

[the_hugmeister]

I would check your sums however. If you charge £4.00 postage, including VAT at 20% then this is 20% of the excluding VAT price. So the EX VAT price would be £3.33 and the VAT would be £0.67, giving a total price of £4.00. Do not overpay VAT.

ah yes divide by 6 rather than multiple by .2


Thank you - you just saved me alot

 

[lesvatadvice]

Do check the contractual position. Are you supplying delivered goods, or goods with an option delivery charge? The VAT position does depend on this. HMRC Notice 700/24, chapter 2 explains more. The link is at http://customs.hmrc.gov.uk/channels...document&columns=1&id=HMCE_CL_000114#P41_3217

 

[the_hugmeister]

Hi,

we only sell online so delivery is required, but the charge is added seperately to the product(s)

does that make sense?

 

[lesvatadvice]

Hi,

we only sell online so delivery is required, but the charge is added seperately to the product(s)

does that make sense?

in which case, the postage/delivery charge follows the VAT liability of the product being sold. In VAT speak, there is a single supply of goods.