We know it’s not easy, so please find our simple guide below on when you should and shouldn’t pay VAT on your printed products.
When is VAT applicable for printed items?
We all know VAT is paid on a wide range of everyday products but the why and when its due is not very clear. There are three main categories for calculating; the standard at 20%, which is levied on most business related items and non essential items which are classed as luxury goods. A reduced at 5% is usually found on healthcare items and energy saving products such as home insulation, solar power etc. Zero Rated where it is not applicable, this includes a whole raft of items including some printed materials.
Zero Rated Items
Refers to items that do not require VAT as per ‘VAT Notice 701/10: zero-rating of books and other forms of printed matter’. This notice includes the following:
Pamphlets, Folded Leaflets, leaflets, flyers, newsletters, newspapers, brochures, booklets, books, magazines, catalogues, directories, manuals, sheet music, maps and timetables.
20% VAT Rated Items
These are the items that require VAT to be paid at 20%. Generally speaking these are items that will be kept, displayed in public or used as a business amenity. This section includes the following items:
Stationery such as letterheads, compliment slips, business cards. As well as Envelopes, invoices, labels, appointment cards, tickets, stickers, folders, forms, posters, postcards, invitations, certificates, calendars and coupons or vouchers.
The Exception That Makes The Rule
As we all know, there are exceptions to most rules and in the printing world there are a few. If you want to order posters you will need to pay standard VAT at 20% due to them being displayed in public or being kept as a souvenir. But if you are ordering a leaflet that is being distributed by hand, then they are zero-rated. So, what stops a leaflet being a poster or a poster being a leaflet? It is usually defined by the following: a significant amount of text on one side of the leaflet to ensure it is for hand-held reading purposes and not for mounting on walls. Also a printed leaflet size must be no larger than A4 to be classified as a leaflet.
As a fail-safe, you maybe told your printing requires 20% VAT on the sight of the artwork, this is in circumstances where it’s not clear. For example a from time to time we see brochures which have a form or notes pages within the design, ordinarily a brochure does not require VAT, but if it contains pages inside which are meant to be written onto and these are more than 25% of the pages then VAT should be charged.
To make this more clear, an 8 page brochure which had a single page as a form or notes page would not need vat, if 2 pages are forms then this would equal 25% so it would need VAT.
If your printed item can be exchanged for products, or discount and includes a redeemable offer then they need VAT. By this we mean if the design contains straplines such as ‘Free entrance with this flyer’ or ‘free bottle of wine with this voucher’, these offer a redeemable, therefore require VAT.
It is a common belief that charities do not pay VAT and while they may be worthy of some tax reliefs, they are still liable for VAT on printed goods. Please visit the HMRC website if you are a charity and would like to look into claiming back VAT you have paid.
For further information please visit the Inland Revenue website: Gov.uk rates of VAT for details.
Dean Williams is a design and marketing blogger working for Print-Print Limited, promoting business and building brands through quality print marketing. If you’re interested in small business promotion then please get in touch email@example.com