Answered by Phil Verity, Mazars
Postage stamps are exempt from VAT. The exemption only relates to services supplied by the Post Office for the conveyance of postal packages.
Charges for postage and packing made by suppliers are subject to VAT and that tax can be reclaimed where the goods are used for business purposes.
Where no separate charge is made for packing and carriage the VAT treatment follows that of the goods. For example, where the goods are zero rated such as food the whole charge will be treated as zero rated.
The situation is a little more complicated where postal services provided by the Post Office are treated as disbursements.
This usually applies in the case of direct mailing services where someone supplies services as agent in dealing with his principal’s mail.
Where postage is treated as a disbursement (where the service is provided by the Post Office or operators licensed by Postcomm) and the disbursement is reimbursed by the client/customer, VAT is not chargeable.
Phil Verity is a partner at Mazars, the international accounting and business advisory firm, and head of the mid corporate market business line.
Phil works with a wide variety of entrepreneurial and owner-managed businesses, helping them tackle the challenges of growth and development.
He frequently advises companies on issues such as business strategy, financial management and control, mergers and acquisitions, succession and overseas expansion.