Many clients find it confusing regarding the VAT rules with regards to printed items and it certainly can be complicated. Is there such a thing as VAT Free Printing, let us try and explain how VAT and printing works.
We all know about VAT, but here’s a bit more detail:
- Setup in 1973 as a result of Britain entering the European Economic Community.
- From a low point of 8% in June 1974, VAT in the UK has risen to 20% at the time of writing (2016).
- VAT is the third largest source of government revenue.
- Fundamentally, VAT is a tax on consumer expenditure, i.e. it is a tax on the supply of goods and services.
- VAT is charged when a VAT-registered business sells to another business, or a non-business customer.
- There are different bands of VAT- 20% (standard VAT), 5% (reduced VAT) and 0% (zero VAT Rated). When it comes to printing, we are only concerned with 20% and 0% VAT.
Obviously, that is all very boring. But, if you’re interested in buying print, it is really import to know what printed products are VATable and which are Zero Rated, as obviously this affects how much you will be paying.
Most printing is classified by HMRC as standard rated in effect you must pay VAT on the printed item. So stationery items such as letterheads, compliment slips and business cards carry VAT along with invitations, posters, pocket folders, tickets, greetings cards and postcards.
You will be pleased to know that there are exceptions to the rule. Nearly all booklets, brochures and leaflets are zero rated so you do not pay vat this can be particularly helpful to organisations or individuals who cannot reclaim VAT. If your leaflet contains a 10% off with this leaflet type offer or free entry to an event then it should carry VAT as it can be thought of as a ticket. Leaflets that do not carry VAT should be meant to be read a few times and thrown away. Instruction leaflets are zero rated as it generally accompanies some other service or product.
Finally just to confuse us all even further a leaflet that is encapsulated or laminated is standard rated as the HMRC deems that it is intended to be kept by the recipient. Another pointer from the HMRC is that if thick card is used they believe it has been designed to be retained so again could carry VAT.
Some printers add VAT to everything then they cannot go wrong but we try to apply it on a job by job basis if you are unsure we will always try to guide you when you are ready to place an order.