VAT on delivery charges:
Founding and supporting a business in the United Kingdom needs a business owner to run through manifold checklists. This is to guarantee that they not only achieve their business goals and milestones efficiently but also in the process do not miss out on any legal or regular compliance. It is stimulating to note how minor aspects of running a business like postage, stamps, and VAT on delivery charges can be extremely significant in terms of rules and suggestions. For any business, these expenses are indispensable. Now, these expenses attract VAT. This is something that is a basis of concern for the mainstream of businesses in the UK.
There are some rules and regulations surrounding this, which are applicable under specific conditions. It is very essential for all businesses functioning within the territory of the UK to be well aware of these rules and circumstances nearby VAT on postage and stamps. So is there VAT on postage and do you, as business owner, have to pay it? If yes how much and when, this comprehensive guide will be answered.
What is postage VAT?
This refers to the value added tax applied to postal services in the UK. To clarify in simple words, it is a tax imposed on the cost of mailing and shipping. Businesses that direct mail and posts have to pay this tax. As an overall recommendation, the price of the goods plus the shipping fee is to be included in the total cost. Therefore, if there is VAT on the product, there will also be VAT on the linked postal facilities.
Alone from this, VAT relates to stamps and delivery charges as well. For a comprehensive understanding of this, it is significant to know the tax applicability of stamps and delivery charges as well. This is because along with postage, these two activities are also essential parts of the mailing and shipping process.
In the ensuing sections we will discuss and appreciate the situations based on which postage VAT on delivery charges VAT are charged.
VAT Conditions:
VAT on Stamps:
Whether accepted via a stock or the post office, unused stamps are free from VAT. However, the stamps must be sold for value or less and be valid for postage to be free from VAT.
Retailers who sell first or second class stamps provided by the royal for me more than their face values are taxed at the standard VAT rates. Note the second hand stamps can be sold within the margin scheme. In this situation, the buyer may not be conscious of the margin and the seller will account for the same profit fringe.
VAT on Postage:
The cost of stamps and any related delivery fees are passed on to the client if they are purchased for the delivery of goods. In such an instance, the VAT is levied on the total delivery price including the stamp cost.
It should be distinguished that services under the banner of Royal mail postage are measured as “universal postage services” and therefore are exempted from VAT. The revenue generated and dispatched to universal postage services are subject to price and regulatory changes.
However, note that Royal Mails parcel services are not exempted from VAT charges. For postal services, as business owners you must charge customers VAT at the suitable rate whether you send packages using royal mail parcel services or outside courier. The rate will be the average VAT rate. Note that as per the VAT postal regulation, if the product is excused from VAT, the postage will also be free from the same.
VAT on Delivery Charges:
Vat on delivery charges is resolutely grounded on the circumstances surrounding the delivery of the goods. If the selling price of the good is inclusive of the delivery charges or there is no additional delivery fee, then VAT will be levied on the full selling price of the good. The condition holds whether or not there is any delivery as per the business contract.
If there are extra or particular delivery charges, then the goods must be transported to the place specified by the customer. Now, if standard rate goods are delivered, then the VAT charges for the delivered things will entice the standard VAT rates. If the delivered goods are zero rated then applicable VAT on delivery charges will also be zero.
Rates of VAT in the UK:
Postage VAT basically emulates the VAT that is levied on the good or item that is being sent or delivered. Expect you are sending a watch that charms a VAT of 20% then the postage VAT will also be 20%. In addition, if you are delivering books which are zero rated items under VAT regulations, then the appropriate parcel and postage VAT will also be zero.
FAQ’s:
Do you pay VAT on a post?
It is a universal public service facility. That is why most people trust there is no VAT on postage but in reality, it is not true. The VAT is added to shipping charges agreeing to the compound supply rules. According to the composite supply rules, if the goods are eligible for VAT, then the shipping amount becomes inclusive of the price.
Is there VAT on postage stamps?
If you are running a courier service, you must transport posts using stamps. If you don’t know about VAT on stamps and don’t include it in the delivery burdens, you may end up giving it out of your pocket. Royal Mail class 1 and class 2 are exempted from VAT. However, imported postage stamps are not VAT excused.
Is there VAT on delivery charges?
VAT on delivery charges depends upon the sort of goods and services. If the item belongs to the zero-rated categories, you must not charge VAT from customers on shopping charges. However, if the product category is standard-rated, 21% VAT on delivery charges will be charged. For instance, if the delivery charges are 10 pounds, its VAT will be 2.1 pounds.
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