All change at the Royal Mail!

There has been a lot of press coverage this week of the price increases at the Post Office.  The new prices are effective from 2nd April 2012 and see an increase of between 1p to 3p on a standard letter postal costs depending on which letter service you are using.

As part of the price review VAT is now being charged on all bulk mail. This means that if you are currently using a Royal Mail account to send your office mail, then you will now have to pay VAT on this.  If you are in a non-vatable business, for example insurance, council run gyms or an industry where VAT is only partially recoverable i.e. charities , trade unions or associations then it might be cheaper to revert to a franking account for the time being as VAT is not being charged on as many franking services.

There are a number of views as to why the service is making this radical change to the postage pricing structure.  Some schools of thought are suggesting that the imposition of VAT on mail services is driven by Europe and merely brings the Royal Mail in line with the Downstream Access providers to promote competition and level the playing field, whereas others see more sinister moves afoot - harmonisation of service prior to the eventual denationalisation and postal service sell off.

Other changes that have received less mainstream press coverage relate to the change is the actual services themselves.  Many old familiar services have been renamed - almost it seems in an attempt to confuse rather than assist the buyer.

For example Cleanmail could now be classified as Business Mail or Advertising Mail (Unsorted).  Walksort is being disbanded as all mail centres now have the technology to walksort.  Mailsort has been simplified into two categories Highsort or Lowsort depending on the sort level being used.

Sustainable Mail, one of the innovative new products that Royal Mail introduced a few years back is now only available on Advertising Mail and therefore will no longer apply to mailings which are only eligible for the Business Mail category as opposed to the Advertising Mail option.

In the Business Mail category you can now only send out letters or large letters under this heading - packets are no longer eligible for this service which means that large items won't qualify and will have to be sent using Business Mail First Class or Business Mail (not sure what the logic is here as Advertising Mail is Advertising Mail whether it's first or second class - why should Business Mail be different to everything else?) or Packetsort which has less of a discount.

As ever with the Post Office the devil is in the detail and it's worth consulting an expert about your postal needs for the coming year before you put in too much planning.  Mailing Expert is on hand to help clients old and new with the changes.  Please call Mailing Expert on 01825 983 033 and we'll be happy to help with all your mailing needs.

Beat The Vat Man – Post Early For The Best Price

During 2011 there were a number of changes to the way in which the Royal Mail are regulated. A small number of services are now subject to VAT and this is due to be extended during 2012 across the piece. By 2^nd April just about every Royal Mail service used by businesses will be VAT rated.

Although the change will not affect most businesses who are VAT rated, the change will have a major impact on small businesses, insurance brokers and financial institutions who are not able or are only partially registered for VAT.

Mailing Expert understands that services such as 1st and 2nd Class stamped and franked mail, Special Delivery, Next Day (Stamped and Franked), Standard parcels and Keepsafe will continue to be VAT exempt for the foreseeable future.

Some services such as Recorded Signed For will remain exempt from VAT only if purchased with an exempt service.

Financial institutions that are not VAT rated and have financial statements and the like to send out at the end of March will face a twenty percent hike in their costs unless they are able to get produce and send these out before the 2^nd April when the changes take place.

After 2^nd April Royal Mail pricing structures will be on a level playing field with downstream access providers  who currently are not able to compete with the Royal Mail on price for non VAT businesses. It is likely that many businesses will move away from Royal Mail to use these cheaper services.

Mailing Expert is helping a number of businesses that want to beat the VATman by booking in mailings for February and March. We can also help those unrated businesses access the postage discounts available from the alternative providers. Call Mailing Expert on 01825 983 033 for further details.