New European Legislation has led to a change in the VAT rules for UK postal services. Until this point, Royal Mail Retail products have been exempt from VAT.
A limited range of services became subject to VAT from January 2011 but from 2nd April 2012, this will extend to all Royal Mail Retail services. This means an automatic 20% increase to postage bills for the following Marketing Services:
• All Mailsort and Walksort products
• Big Book
• Royal Mail Heavyweight
Whereas most business customers will be able to reclaim the extra cost through their usual VAT return, this will cause issues for Charities and Financial Services who will not be able to reclaim.
However, Royal Mail Wholesale, which includes Down Stream Access solutions, is not required to add the VAT in April. And as Howard Hunt Mail is a fully licensed agency which works with all Down Stream Access Suppliers, we can mitigate the VAT on the access element.
This means we can help you avoid the increases to your invoices on advertising mail and other DSA schemes minus the 1p logistical cost to get it into the Royal Mail system.
For example if a charity wants to send out 100k mailing:
The postage element under Royal Mail Retail would be: 16.6p (120 CBC with Advertising Mail)
From 2nd April that price will be 16.6p + VAT = 19.92p
Our price is around 16.2p
From 2nd April = 16.2p + VAT on the logistics only = 16.44p
With the potential to save over 3p per pack, it is vital you work with a provider who can maximise your budget. Howard Hunt Mail makes the complex postal market simple and guarantees the best price by ensuring that our clients are using the right service, the right provider and achieving the biggest discounts that are available at any given time.
We can also help you mitigate the VAT incurred in producing your Door Drops and Direct Mail campaigns. To find out more, please click here to request a call back from one of our experienced consultants.
To find out more about the VAT increase and what services will be affected, click here to visit the Royal Mail website.