SMEs urged to rethink mailing options

Link: Royal Mail to lose VAT advantage

The firm said SMEs should think about using the internet and email for mailing purposes, following a European Commission proposal – likely to be passed – which will force the Royal Mail, and other national suppliers in the EU, to charge VAT on all postal services.

This will result in the cost of a first class stamp rising by as much as 5p from 28p to 33p and while this will hit individuals and businesses of all sizes, SMEs will be the hardest hit as they are non-VAT registered.

Tim Buss, director of VAT at PKF said: ‘The Royal Mail is a labour intensive business and the majority of its costs are wages. There is no VAT charged on wages or salaries. It is therefore inevitable that the cost of postal services will increase substantially and this will hit the small non VAT registered business owner the hardest.

‘We would urge all small businesses – particularly those that use the postal service a great deal – to start looking at alternative ways of mailing such as via the Internet or email as a 5p rise on each item could cripple them.’

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