Changes in UK Postage

Size does mattter.....

[aspdaddy]

Whats this then a new tax on ebayers/amazon sellers :)

www.royalmail.com/change

[budgie]

"It's estimated that over 80% of mail will cost the same or less to send."

Well, we're in the 20% on the wrong side of the change, and so our shipping charges will have to increase. It's also going to be more hassle sending things out, because it's based on size and weight rather than just weight. Can't wait... :(

[chodges84]

I'm in that unlucky 20% as well. My most popular product is rising in price from 68p to £1.20 (first class) and my second most popular from 49p to £1.20.

I really can't wait for it either.

Of course, the knock on effect is that I am going to have to increase my postage rates and this will then push me way over the VAT threshold meaning I'll have to raise it by 17.5% further.

[jweighell]

But you can claim back the VAT on the purchase on the stock in the first place...

[PhilipM]

Yes, we are similarly affected, and postage costs will rise markedly. But everyone is in the same boat and there is no loss of competitive advantage. In the end the consumer must pay, as always.

[aspdaddy]

>But everyone is in the same boat and there is no loss of competitive advantage

Unless you are in competition with bricks and mortar. For exammple cheap books, CDs, posters the postage will be a much bigger issue for online shoppers. OK for amazon whose buisness model is free postage. Hurts the small online resellers.

[heliguy]

Hopefully new competition will come into the Market, TNT post etc... We may be able to fight back at Royal Mail?

Also if you are going to get pushed into the 58K VAT threshold then you can switch to the flat rate sheme and you can stay on this until 180K. This will save you lots of money. I pay 6% VAT, obviously I can't claim VAT back, but it works out to save me thousands. Also I have no VAT accounting bills.

[chodges84]

I thought with the flat rate scheme that you generally end up payting more than if you did it properly?

If done properly I have worked out that I would have to pay about 10% VAT (deducting the things I can claim back from the things I have to pay), so if I could get a flat rate scheme below that, then I would be saving on it.

[EDIT]

Actually after looking at the HMCE's 'VAT ready Reckoner' tool on their website, I should qualify for a 6% rate as well as I should come under the category of 'Retail not listed elsewhere'.

[/EDIT]

[inbound]

the flat rate scheme is ideal IF you believe you fall into a low percentage category.

One very important thing to remember is that it is up to you to decide the best banding for your business, the VAT office take your word for it. You must be able to justify your choice if they audit you though, so don't take the mickey.

[heliguy]

You can take a higher flat rate scheme say if you were a service company with sales staff but not many large purchases, or physical products.
Also there is a time issue here, it took me 30 mins to pay my VAT for the quarter, one form. Just 6% of turnover for the quarter. An accountant would charge you £400 pound a quarter and you would have to organise all the paperwork!