The UK Government has announced that VAT at the standard rate (20%) will apply to certain postal services from 31st January 2011.

Most services will remain exempt from VAT. In particular, First and Second Class stamped and franked mail and standard parcels will be exempt. However postal services and goods that Royal Mail is not under a statutory duty to provide, such as special deliveries etc will be subject to the standard rate of VAT.

If you use any of the services below in your business you should be aware that they will be VAT liable and that you will be charged VAT on them and will have to account for them differently in your VAT returns and annual accounts.

VAT Liable Services

Express and Tracked services

• Special Delivery 9.00a.m. Stamp, Franking and Account
• Special Delivery Next Day Account
• Royal Mail Tracked and Tracked Next Day
• Royal Mail Sameday

International Services (VAT will only be added to EU destinations)

• International Contract Services
• International Airsure
• International Admail and Admail Packets
• International Redirections

Advertising, Catalogues & Magazine Services

• Big Book
• Royal Mail Heavyweight
• Mail Media

Unaddressed Mail

• Door to Door

Receiving and Managing Mail Services

• Keepsafe
• Timed Delivery
• Early Extraction
• Early Collect
• Selectapost

Other Services

• Business Mail Secure
• Admail
• Local Collect
• Callers Services
• Rural Deliveries
• Rural Carriage of Goods

Contract Services

• Presorted Delivery
• Mailroom Management
• Mailroom Consulting Services
• Royal Mail Relay

The good news is that the following services are still VAT exempt.

VAT Exempt Services

UK Services

• First and Second Class (Stamped, Franked and PPI)
• Special Delivery Next Day (Stamped and Franked)
• Standard Parcels
• Recorded Signed For
• Cleanmail, Cleanmail Plus and Cleanmail Advance
• Mailsort (70, 120, 700 and 1400)
• Walksort
• Presstream
• Sustainable Mail

International Services

• International Surface Mail
• International Airmail
• All HM Forces Mail (BFPO)