Royal Mail has confirmed that stamps bearing the image of Her Majesty Queen Elizabeth II remain valid for use. This notice will be updated when Royal Mail makes a further announcement.
1. Overview
1.1 What this notice is about
This notice explains which postage stamps are free of VAT and when VAT must be applied to:
- stamps
- stamped stationery
- other philatelic supplies
1.2 Who should read this notice
This notice is for:
- post offices and other sellers of postage stamps
- stamp dealers
- suppliers of other philatelic materials
1.3 Related publication
Postage, delivery and direct marketing (VAT Notice 700/24).
2. Stamps valid for postage in the UK
2.1 Some stamps are VAT free
Valid UK and Isle of Man stamps are the payment for a postal service that is exempt from VAT.
2.2 Stamps that are valid for postage
Valid postage stamps are unused stamps of the present monarch’s reign on which the value is:
- displayed as being £1 or a multiple of £1
- displayed in decimal currency
- designated for first or second class postage
2.3 Valid UK or Isle of Man postage stamps
If you sell unused UK or Isle of Man stamps that are valid for postage no VAT is chargeable if you sell them at or below face value. But you must account for VAT at the standard rate on any amount the price you charge exceeds their face value.
2.4 Stamped stationery
If you sell stamped stationery that is unused and valid for postage in the UK or Isle of Man, you should account for VAT at the standard rate on the amount you charge less the face value of the stamps.
This applies whether the stamps are printed on the stationery or are ordinary postage stamps that have been stuck on.
3. Other stamps
3.1 Used stamps
All used stamps are taxable at the standard rate.
3.2 Foreign stamps
All foreign stamps, even if they are valid for postage abroad, are taxable at the standard rate.
3.3 Unused, invalid UK and Isle of Man stamps
UK and Isle of Man stamps of earlier reigns or which have a value expressed in shillings or old pence are no longer valid for postage and are therefore taxable at the standard rate.
3.4 Value for VAT of stamps treated as collectors’ items
If you sell stamps that are not valid for postage they may be able to be treated as collector’s items, see section 5.
4. First day covers and other philatelic supplies
4.1 First day covers
A first day cover is an envelope bearing postage stamps with a postmark of the first day of their issue.
4.2 Sale prior to posting of first day envelopes and stamps
If you sell an envelope with unfranked stamps (whether the stamps are fixed to the envelope or not) for your customers to post themselves, you can disregard the face value of the unused stamps and account for VAT on the rest of your charge only.
4.3 Arranged posting
If you arrange for the envelope with the new stamps to be posted to your customer on their first day of issue, you must account for VAT at the standard rate on the full selling price of the first day cover. You cannot deduct the face value of the stamps from the taxable amount.
4.4 Subsequent sale of first day covers and collectors’ items
First day covers and other philatelic collectors’ items are taxable at the standard rate. But they may be eligible for the margin scheme for second-hand goods, works of art, antiques and collectors’ items, see section 5.
4.5 All other philatelic supplies
If you sell any other philatelic items which consist of, or contain, stamps that are unused and valid for postage in the UK or the Isle of Man, you should account for VAT on the full amount that you charge less the face value of the valid stamps.
You should account for VAT on other philatelic supplies on their full value.
5. Philatelic collectors’ items
5.1 VAT liability
Philatelic collector’s items are liable to VAT at the standard rate, but the tax may not always be due on the full value.
5.2 Value for VAT of philatelic supplies treated as collector’s items
Collections and collectors’ pieces of philatelic interest may be treated as collectors’ items and you may be able to account for VAT on the difference between your purchase and selling price. You can find further information in The Margin and Global Accounting Scheme (VAT Notice 718).
If you do not meet the conditions of the scheme, VAT will be due on the full selling price.
5.3 Imported collector’s items
Some items of philatelic interest are eligible for a reduced valuation at importation which gives an effective VAT rate of 5%. This figure is reached by calculating a value for duty using the appropriate duty method, adding any additional costs (see paragraph 3.1 of Imports (VAT Notice 702)) and multiplying the total by 25%. Applying the 20% rate to this value gives an effective VAT rate of 5%.
6. Postage and packing and delivery charges
When considering the VAT liability of delivery charges you will need to consider whether delivery is included in the contract with your customer. If it is, you’re making a single supply of delivered goods (in the case of philatelic supplies) or services (in the case of valid postage stamps). The liability of the delivery or postage and packing charge follows that of the items being delivered, that is standard-rated in the case of philatelic supplies or exempt in the case of valid postage stamps. You can find more about this in Postage, delivery and direct marketing (VAT Notice 700/24).
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