VAT plans for postage criticised
Howard Lake | 19 May 2003 | News
Adding VAT to the cost of stamps will increase the red-tape burden for hundreds of small businesses, charities and individuals across the UK, according to accountants Dean Statham.
Following the recent 1p rise in the cost of a first class stamp, the European Commission has tabled a proposal to apply VAT on state-owned postal services in order to level the playing field with private competitors.
Susan Whiting, partner at Dean Statham, says such a move will cost small operators dearly: “If VAT is applied to a first class stamp at 17.5% it would cost 33p. The issue of accounting for VAT on each stamp used would be a major headache for businesses of all sizes. Small businesses that are not VAT registered will suffer financially. Charities that rely on the post for donations could suffer a cruel blow. Even if the VAT rate was reduced on postage, like it is for many other items to 5%, this would still be a price rise at twice the rate of inflation.
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“It may be a subtle nudge for more businesses to make use of e-mail and more modern forms of communication. Businesses should look at making better use of technology in the workplace and see if they can divert some of their communications via the Internet, rather than in the postbox.”
About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.