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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4092
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I'd love some advice please. I sell online- posting

Customer Question

Hello,
I'd love some advice please. I sell online- posting goods from the UK to Europe. I send roughly 50 letters / packets a day and 75% (ish) of the goods are zero rated for VAT and the other 25% are standard VAT rate.
I understand how to enter the goods on my VAT return but I don't know what VAT rate to put the postage fees under.
I charge each customer 5 euros for postage and I spend on average £2.50 a delivery. Does this delivery fee of 5 euros have to be entered under a 20% VAT rate or can it be zero rated? I have been told that if the contents are zero rated that I can put the postage through as that too, but I don't quite trust the source of that advice.
If you could advise me please I'd be eternally grateful :)
Thank you
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Postage is exempt from VAT. It is neither standard nor zero rated. This is covered in VAT Notice 700/24. However, the exempt supply applies only to Royal Mail services like stamps bought at the Post Office or other outlets or post paid for at the PO. When you charge carriage as part of your business Gov UK web site advise: 'However, if any delivery charge you make to your own customers includes the cost of stamps you buy from the Post Office you may have to charge VAT on the whole amount including the cost of those stamps.' Thus for zero rated supplies there is no problem, but for standard rated the charge must be included in the 20% rate. I do hope that I have been able to shed some light on your conundrum.
Customer: replied 1 year ago.

Hello Keith,

Thank you SO much for that, it's a big relief to speak to someone who knows what they are talking about.

So just to confirm- I should work out how many orders were sent with zero rated goods and how many included standard rated goods. Then I put the zero rated postage fees through as exempt on my VAT return and the standard rated as 20% VAT?

Thanks again

Expert:  bigduckontax replied 1 year ago.
Yoou have it to a 'T.' Just put the adjustments through on the quarfterly next return. The advice on the Gov UK web site can be misleading though. The VAt treatment would follow the type of goods, so for a zero rated item the postage would be charged at 0% also whilst for a standard rated supply the selling price plus carriage would reflect the VAT at 20%. Please be so kind as to rate me before you leave the Just Answer site.
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.