Q: I have been using a franking machine for many years but now understand that I can reclaim VAT on my postage if I use a SMART franking machine. Is this correct? And what is a SMART franking machine?

Yes, it is true that businesses using a SMART franking machine can enjoy a VAT refund at the end of the tax year when they submit their accounts. In fact if your business uses VAT-able services from Royal Mail then using a SMART franking machine has been described as “essential” by Royal Mail itself.

It is essential because you can only reclaim the VAT you have spent on postage throughout the financial year if you’re using a SMART franking machine.

A SMART franking machine facilitates online access for account monitoring and general administration purposes, thereby assisting your records/accounts department when it comes to compiling your tax return and itemizing your postage expenditure to the nearest penny.

This is the only surefire way for the VAT inspectors to accurately check how much you have spent on VAT-able Royal Mail services.

So why do I need a Smart Franking Machine?

Because these digital wonders can help you claim back your VAT on postage. This new breed of franking machine – called “Smart” by the Royal Mail – is equipped with the capability to automatically include the type of letter or parcel you are sending that is going to be subject to VAT whereas non-Smart machines rely on the machine operator to key in the right postage amount.

That’s all very well, but the trouble is the Royal Mail can’t tell from just the postage amount what category of item you have sent so therefore when you are handed your receipt
Because a Smart franking machine is digital and relays information to your franking supplier it can ensure that every item you send has been logged and classified for identification purposes when you come to file your VAT re-claim.

In the words of the Royal Mail itself…

“You will need a “smart” franking machine which can handle VAT if you want to buy any of the services affected by VAT. The well-known services affected which are available on franking machines are Special Delivery™ 9.00am and Airsure®, and Single Business Collections.

“A SMART franking machine is essential if your company uses Royal Mail VATable Products as it will allow you to reclaim your VAT.”

Is there anything else Smart franking machines do?

Yes, depending on the type of machine you decide to use, there are many features that differentiate a Smart franking machine from a standard franker. Chiefly, it is the digital technology that allows online functions to be utilised which can in turn maximise computerised data processing and monitoring and give you those detailed breakdowns and analysis that can help you make cost-efficiencies and limit business expense.

For instance, an entry-level Smart franking machine gives you the chance to make the most of tracking, monitoring and control for up to 20 accounts, whereas a high-end corporate Smart franking machine can provide those features for up to 100 accounts as well as give you access to PC software upgrades and applications for even greater management and cost analysis over 300 departments.


Using a franking system to deliver your important mail-outs has always been rewarding for the bulk discounts available from the Royal Mail, but with VAT now on the scene catching many more people in its grasp there has never been a better time to think Smart.

For any business that relies on the Royal Mail postal service, making the most of a Smart franking machine will not only provide optimum workplace efficiency but also save hundreds of pounds a year in administration costs, as well as claw back some of that VAT.


Author - Nigel Vaughan

Nigel has over 10 years experience in digital marketing, and loves tech and all kinds of electronics. A keen cyclist and cycle-tourist, he has cycled through 25 countries worldwide.

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