VAT on postage: a guide for franking machine users

For most businesses, everyday post is unaffected by VAT: standard stamped and franked 1st and 2nd class mail, and standard parcels, are exempt. VAT applies mainly to certain added-value services, such as tracked, express and some international services. Most VAT-registered businesses can reclaim any VAT charged.

Which services are usually exempt?

Most core Royal Mail services stay exempt from VAT, including standard stamped, franked and PPI 1st and 2nd class mail, standard parcels, and Signed For. There is no VAT to pay when you buy stamps for these.

Which services can attract VAT?

VAT typically applies to added-value and business services, such as tracked and express services, some Special Delivery options, and certain international (EU) services. Royal Mail lists the affected services and pricing in its current products and pricing information.

Franked mail and VAT

A Smart Meter or Mailmark franking machine can handle VAT-rated services and provide VAT invoices, so you can reclaim the VAT where eligible. A basic standard franking machine cannot access VAT-rated products. If you are unsure which your machine supports, speak to Mailcoms on 01543 572 776 or your supplier.

Getting advice

Most VAT-registered businesses can recover VAT in full, making these charges less significant, but a few cannot. For advice specific to your business, speak to your finance team, accountant or tax adviser, and check Royal Mail’s current guidance for the latest position.

At Mailcoms we do not use commission-paid sales executives – we give you factual information and tell you how it is. If you are interested in getting a franking machine or upgrading to Mailmark with lower prices available, please view our franking machine page here or call us on 01543 572 776. Mailcoms is a Royal Mail Authorised Independent Inspector & Maintainer of postal franking machines, serving over 40,000 customers across the UK.

Frequently asked questions

Is there VAT on 1st and 2nd class franked mail?

No – standard stamped and franked 1st and 2nd class mail is exempt from VAT.

Which postal services can attract VAT?

Mainly added-value services such as tracked, express and some international services; Royal Mail lists the affected services.

Can I reclaim VAT on postage?

Most VAT-registered businesses can reclaim VAT in full, but check with your accountant for your circumstances.