Is there VAT on postage and franking machine services?

Standard 1st and 2nd Class franking remains exempt from VAT, but a wide range of Royal Mail business and enhanced services are liable to VAT. To pay for and reclaim VAT on those services through a franking machine, the machine must be fitted with a Smart meter that reports the service types used back to Royal Mail and generates a VAT statement.

If you are unsure whether your franking machine is compliant, email info(at)mailcoms.co.uk or call us on 01543 572 776.

Background to the VAT changes

Royal Mail introduced changes to VAT on postage that affect many customers and franking machine users. Some services became liable to VAT, and without a Smart franking machine meter customers were no longer able to pay for these services via a franking machine.

Normal services such as 1st and 2nd Class franking continue to be VAT exempt.

Services that became liable to VAT

• Cleanmail Service
• Cleanmail Plus Service
• Cleanmail Advance Service
• Mailsort (70, 120, 700 and 1400) Service
• Walksort Service
• Presstream Service
• Sustainable Mail Service
• Packetpost Service
• Packetsort Service
• Packetsort Plus Service
• Packetpost Returns Service
• PO Box Services
• Advertising Mail (70, 120 and 1400) Service
• Automated Standard Tariff Large Letter Service
• Response Services (inc. Licence fees)
• Standard Account mail Service
• Redirect Diversion Service
• Ministerial Pouch Services
• Do not redirect Service
• Enhanced bulk mail services are also liable to VAT, with the exception of the exempt services described below.

Further information

Many business customers can reclaim VAT. If your business is registered for VAT, and sells taxable goods or services, then as a general rule you will be able to recover the VAT in the normal way on your VAT return. If you use a franking machine for any of the above services then it will need to be fitted with a Smart meter, which enables data to be transferred back to Royal Mail on the type of services used. This in turn automatically generates a VAT statement and allows you to claim the VAT back from HMRC, and importantly allows you to continue using the service.

Royal Mail services that are or will become liable to VAT

Standard Account Mail

Express & Packet Services:

• Special Delivery 9.00AM stamp, franking and account
• Special Delivery Next Day account
• Royal Mail Tracked and Tracked Next Day
• Royal Mail Sameday
• Packetpost
• Packetsort
• Packetsort Plus
• Packetpost Returns
• Recorded Signed For will also become liable to VAT if purchased as an add-on to a standard rated service. In all other circumstances it will remain VAT exempt.
• Business Mail
• Cleanmail, Cleanmail Plus and Cleanmail Advance
• Automated Standard Tariff Large Letter
• Mailsort (70, 120, 700 and 1400)
• Walksort
• Marketing Services
• Advertising Mail (70, 120 and 1400)
• Sustainable Mail
• Big Book
• Royal Mail Heavyweight
• Mailmedia
• Door to Door
• Publishing
• Presstream
• Response Services

Response Services (inc. Licence fees)

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

• International Contract Tracked and Secure Services (Airsure and International Signed For)
• International Contract Services (Mixed Mail, Letters, Flats, Packets, Destination Sort and Mbags)
• International Airsure
• International Admail and Admail Packets
• International Redirections
• Outbound Mail Services

Business Collections

Inbound Mail Services

• Timed Delivery
• Early Extraction
• Early Collect
• Selectapost
• Local Collect

Other Services:

• Business Mail Secure
• Admail
• Callers Services
• Rural Deliveries
• Rural Carriage of Goods
• PO Box Services
• Redirect Diversion
• Ministerial Pouch services
• Do not redirect

Contract Services

• Pre-Sorted Delivery
• Mailroom Management
• Mailroom Consulting Services
• Royal Mail Relay

Services that remain exempt from VAT, in addition to free services

UK Services

• 1st and 2nd Class (stamped, franking)
• Special Delivery Next Day (stamped and franking)
• Standard Parcels
• Recorded Signed For (if purchased with an exempt service)
• Keepsafe

International Services

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

At Mailcoms Ltd we do not operate with commission paid sales executives and we believe in giving factual information and telling you how it is.

If you are interested in getting a franking machine or upgrading to a Mailmark franking machine, please view our franking machine page here or call us today on 01543 572 776. We are a Royal Mail Authorised Independent Inspector & Maintainer of postal franking machines since 2008, with over 20,000 customers nationwide, and we can supply you with our very own range of models.

Frequently asked questions

Is VAT charged on 1st and 2nd Class franking? No. Standard 1st and 2nd Class postage, whether stamped or franked, remains exempt from VAT.

Which Royal Mail services carry VAT? A range of business and enhanced services are liable to VAT, including Cleanmail, Mailsort, Walksort, Presstream, Packetpost, Royal Mail Tracked, Advertising Mail and most account-based services.

Why do I need a Smart meter on my franking machine? A Smart meter reports the service types you use back to Royal Mail, automatically generates a VAT statement, and lets you reclaim VAT from HMRC. Without it you cannot pay for VAT-liable services through your franking machine.

Can my business reclaim the VAT? If your business is VAT registered and sells taxable goods or services, you can generally recover the VAT on your VAT return in the normal way.