There had been an announcement made by the Royal Mail about certain alterations regarding the VAT on several services which had been liable for VAT starting the second of April, 2012. If you use a franking machine and your business uses a high volume of these services you should be aware that you will only be able to claim your VAT back on the postage if the franking machine you are using is SMART enabled.

Normally a franking machine takes note of how much postage is paid on items, the user for instance would type in the cost of the item to be sent  for the letter to be franked. However Royal mail would not be able to tell exactly which product or service has been used. Since only certain products are subject to VAT, it would be impossible for Royal Mail to tell how much VAT needs to be paid unless they are informed of the specific items purchased. This is where a Smart franking machine comes in.

A smart franking machine ensures that when the postage is paid on an item, the individual products are noted, informing Royal mail how much VAT they need to pay on the items subject to VAT.  This means an invoice can be raised including the amount of VAT paid which the user can then use to reclaim the VAT from HRMC.

Most machines now come Smart enabled, however it is worth checking with your manufacturer to make sure. If you are using an older machine, and it does not come with Smart technology, then you may find that you will be able to upgrade it easily with a free download.

Here are services from Royal Mail that are VAT liable:

Standard Account Mail

For Packet and Express Services

  • Special Delivery™ Next Day Account
  • Special Delivery™ 9AM for stamping, franking and accounting
  • Royal Mail Sameday®
  • Royal Mail Tracked and Tracked Next Day
  • Packetsort
  • Packetpost
  • Packetpost Retunrs
  • Packetsort Plus
  • If you have purchased “Recorded Signed For” as an additional to the standard rated service, it will also become liable to VAT. But if not and based on other circumstances, it will be part  of the list of VAT exempt.

Business Mail

  • Automated Standard Tariff Large Letter
  • Cleanmail, Advance and Plus
  • Walksort
  • Mailsort (1400, 700, 120 and 70)

Services for Marketing

  • Sustainable Mail
  • Adverstising Mail (1400,120 and 70)
  • Royal Mail Heavyweight
  • Big Book
  • Door to Door
  • Mailmedia


  • Pressstream

      Response Services

  • Response Services (which includes License fees)

International Services (VAT are just added if the destination is EU)

  • International Contract Services (Mixed Mail, Letters, Flats, Packets, Destination Sort and Mbags)
  • International Airsure®
  • International Admail and Admail Packets
  • International Redirections

Outbound Mail Services

  • Business Collections

Inbound Mail Services

  • Early Extraction
  • Timed Delivery
  • Select a Post
  • Early Collect
  • Local Collect

Other Services

  • Admail
  • Business Mail Secure
  • Callers Services
  • Rural Carriage of Goods
  • Rural Deliveries
  • Redirect Diversion
  • PO Box Services
  • Do not Redirect
  • Ministerial Pouch Services

Contact Services

  • Mailroom Management
  • Pre-Sorted Delivery
  • Royal Mail Relay

For more information on which products are VAT liable please see Royal mail. If you are looking for a franking machine, we will be able to find the best manufacturers for you, simply fill out the form at the top of the page.

Reclaiming VAT on franking products.