The current pandemic has led to fewer people than ever before visiting our high streets and retail parks. This has led to a surge in online shopping and subsequently, online deliveries of these products. Many businesses who solely sold in their physical premises had to offer their products online. This rapid shift has led to some businesses not quite being aware on VAT delivery charges and the possible expenses that could be incurred by the business as part of the process of posting out the products to your customers.
That’s why today here at D&K Accounting we’re going to be running you through everything you need to know about the VAT delivery charges and what exceptions there are. So first let’s tackle the main question. As an e-commerce business do you have to pay VAT on delivery charges? Well, that all depends on who you’re using. You do unless you’re using Royal Mail. The reason for that being as they are classed as the universal postage provider in the UK and are state-controlled.
So how much do you have to pay in VAT? Well, you have to pay the 20% that is the current VAT rate. If you’re charging for postage as well as the item itself you’ll pay VAT on the final total. Whereas if you are providing postage free of charge you will only be paying VAT on the price of the item itself. Fortunately, however, VAT on delivery costs can be claimed back through your business expenses so it’s worth keeping a log of all of your sales and associated costs.
Another thing to be aware of is posting to the EU mainland and how the rules can change. Firstly you need to know if your customer is VAT registered in that respective country, then you will charge them at a zero rate. If for any reason they aren’t VAT registered you will need to go ahead and charge them VAT at a rate of 20%.
Hopefully, this has cleared up the rules and exceptions surrounding VAT delivery charges in the UK a bit for you so you know where your business lies in the bigger scheme of things. If you’re still unsure of where your business lies in regards to these charges don’t worry. Why not get in touch with a member of our team and we can run through how these charges apply to your business.