VAT and Royal Mail

VAT on Royal Mail services is nothing new; with effect from 31st January 2011 some of Royal Mail services that can be accessed and paid for through a franking machine did become liable for VAT. In simple terms, if you didn’t or do not have a franking machine fitted with a ‘SMART’ Meter then you will no longer be able to access these services via your franking machine.

A Franking Machine fitted with a ‘SMART’ meter enables data to be transferred back to the 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 more importantly allows you to be able to continue using the service.

Where will I get my VAT invoice from?

If you have a SMART machine you will receive an invoice directly from Royal Mail.

What is SMART Franking?

SMART refers to new franking machines and the way that they account for VAT affected services offered by the Royal Mail. If your machine has the ability to account for VAT, then your machine is SMART.

But how does this affect me?

Changes to VAT rules and the way in which the Royal Mail products are regulated, have affected the VAT status of a number of their products. A limited range of Royal Mail products became subject to VAT through 2011, and this has been extended to other business products from 2 April 2012.

Universal services (USO) such as 1st and 2nd Class stamps will continue to be VAT exempt. As always, this is subject to change in the future.

For more information on Royal Mail prices for 2012 visit:

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. For professional advice, talk to your Finance department, accountant or tax advisor. You can also find more information on VAT at the HMRC website: