Understanding VAT and postage
Postage might seem simple at first glance, but once VAT comes into the picture, things can get a little more tangled. If you’re running a small business or sending parcels regularly, knowing whether VAT applies to postage can help you budget more accurately. The good news is that not all postage attracts VAT—but some types do, depending on who you are and how you’re sending.
When postage is VAT-exempt
Most Royal Mail postage services for personal or standard use are VAT-exempt. That includes regular first and second class stamps, as well as standard parcels you drop off at your local post office. If you're just sending a birthday card to Auntie Mary or posting a little thank-you gift, there’s no VAT added to those services. It’s all part of the Royal Mail’s role as a public postal service, which grants them this exemption for what they call ‘universal service’ products.
When VAT does apply to postage
Things change a little when postage is part of a business transaction or when using a courier service that isn’t Royal Mail. For example, if you're selling on platforms like eBay, Etsy or Vinted and charging for postage, VAT may apply depending on how it’s invoiced. If you’re VAT registered and include delivery in your sale price, that amount is typically subject to VAT, just like the item itself. The same applies if you’re using a courier like Evri, DPD or UPS—these services do charge VAT on their postage costs.
Business postage and VAT registration
If you're a VAT-registered business using Royal Mail’s standard services, you usually won’t be charged VAT on postage—but you also can’t reclaim VAT, because it wasn’t there in the first place. On the other hand, if you're using a VAT-registered courier or a tracked Royal Mail service not covered by their universal obligation, VAT will be charged and can be reclaimed if it’s part of your business activity.
How to spot VAT-inclusive services
If you’re not sure whether VAT applies to a particular postage method, check your receipt or invoice. VAT-inclusive services will clearly show the VAT amount or a VAT number for the courier. Online sellers should also keep track of how they invoice customers, especially when combining goods and postage into one total amount. Being aware of how VAT works with delivery charges can help keep everything tidy when it’s time for your bookkeeping or tax return.
Summary
So, is there VAT on postage? It depends. Royal Mail’s standard services for personal use are VAT-free, but business use and courier services often come with VAT attached. Knowing which is which can help you stay on top of your costs and avoid unexpected surprises. Whether you're sending a thoughtful gift or posting products for your shop, understanding the rules around VAT and postage brings peace of mind and a bit of financial clarity.