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Is There VAT on Delivery Charges - Know The Facts

03 June 2021

Is There VAT on Delivery Charges

This depends if there is a delivery or no. The VAT liability is calculated based on the VAT liability of the products. Now, this is when the goods are delivered or shipped. If there is no shipping or delivery of the goods then VAT is calculated at a standard rate and not according to the VAT liability of the products.

What is VAT or Value Added Tax?

A value-added tax (VAT) is a tax that is added to a product's consumption. This value keeps getting added at different stages until the product is delivered to the consumer. VAT begins at production and ends at selling. The cost of products used for manufacturing the product is not included in VAT. It only includes the cost of the final product.

  1. Check if you are going to deliver your item to your buyer cause the total cost will include delivery charges in the total amount to be paid.
  2. The VAT can be charged on the total amount of the billing plus the postage.
  3. When a supplier charges for delivery and the amount of goods, it is termed as a single supply of delivered goods.
  4. You can charge VAT only on the items for which you have included the postage amount.
  5. If you have signed the delivery as 'on approval'. In this case, the customer can decide at the time of delivery whether to buy the item or not.
  6. In such an instance, the VAT is only applicable on items the person buys.
  7. For the customer based in the UK, the VAT charges must be paid if the delivery contract mentions the charges.
  8. If the delivery includes an additional charge of delivery and the VAT is charged based on the VAT liability of goods.
  9. Usually, an additional fee for packaging is included in many services. So any such charge is considered as minimal cost in the UK.
  10. The VAT liability of food differs in other consumer goods. The rules go according to the VAT liability rules of food. VAT is charged on hot food takeaway at a standardised rate, and the same goes for delivered food. The VAT is charged according to the conditions.

So these were some of the situations and occurrences on the basis of which VAT charges are decided. Furthermore, international deliveries, zero-rated and started rated items charge Value Added Tax differently.

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