Business Price changes Royal Mail Oct 26

ballisticbrian

Just seen the business price rises for small parcels Oct 26 and am always amazed how expensive it's getting. When I started my small business 19 years ago, it was £1.40 for a small parcel, (although the formats were different)

Small Parcels up to 2 kg from Oct 5th:

• Standard Click & Drop (Retail / No Account): will move up to £4.60 (2nd Class) or £5.90 (1st Class).
• Business Click & Drop (Linked to OBA): Will match your contracted business account price (£3.95 base rate).

Link for small business for other formats:

Business price guide (prices effective from 5 October 2026)

The reason this is critical to me, and many others, is because it can have a knock on effect on which cheap items are actually worth selling on line.

soolin

There was a thread about the costs for 'casual' non business rates- which I can't find, but the price differences are interesting as tracked postage is cheaper than standard postage and in some cases cheaper than business accounts through OBA.

(This is the new RM rates for non business - I'm not really sure how to phrase it as I'm not trying to make it relate to who is and who isn't a business seller - just how RM sell their products.)

Our online prices (valid from 5 October 2026)

If sellers check it is odd that 'tracked' post is cheaper than standard with, for instance a small parcel up to 2kg being £3.75 for tracked 48 and £4.80 for tracked 24.

Post office rates remain considerably dearer with tracked 48 up to 2kg being £4.70 and tracked 24 being £6.05. however at the post office standard post is cheaper than tracked with 2nd class being £4.60 and 1st class £5.90.

Our prices (valid from 5 October 2026)

As I have mentioned several times before I actually gave up my RM OBA account and just use standard tracked (postage and for ebay sales ebay labels.

martindow

VAT registered businesses can reclaim the VAT element of postage - I think only 1st and 2nd class letter stamps are VAT free. This will make the comparison of prices more nuanced for them

I'm not sure if Brian's prices in the OP include VAT or not. Or if he is VAT registered.

soolin

https://forums.moneysavingexpert.com/discussion/comment/82126606#Comment_82126606

My turnover was never enough to be VAT registered, my online sales were always more of a side line as I do have other freelance work. The VAT comment though may well apply to a few on here who I know have a proper turnover.

The OBA scheme I was on offered no compensation at all for lost items, but when I did use the scheme my large letter prices - which a great number of my items are , was very competitive. Unfortunately when the prices started creeping up I lost any benefit .

ballisticbrian

VAT registered businesses can reclaim the VAT element of postage - I think only 1st and 2nd class letter stamps are VAT free. This will make the comparison of prices more nuanced for them

I'm not sure if Brian's prices in the OP include VAT or not. Or if he is VAT registered.

So if you use products under BPL / UNH they fall under the basic non VAT services untracked and they are not subject to VAT.

If you use the click and drop (under an OBA) for tracked / semi-tracked mail, you pay the VAT on that. So a business like mine might have a cut off where mail is spilt two ways to try to get the best of both worlds.

davidian84

I used to use OBA but the pricing is crazy, 2kg will be £3.75, business price is £4.30 plus vat and plus green/fuel/peak surcharges.

ballisticbrian

https://forums.moneysavingexpert.com/discussion/comment/82135792#Comment_82135792

That's why I posted on here. It's a raise that's disruptive to our business. Although I'm not sure what you mean by "business price", you mean with the vat etc added?

soolin

https://forums.moneysavingexpert.com/discussion/comment/82135814#Comment_82135814

Probably the same issue I had. My OBA prices became considerably dearer than standard RM prices and I wasn’t prepared to spend up to 80p to a pound more per parcel and have no ability to claim for losses.

davidian84

https://forums.moneysavingexpert.com/discussion/comment/82135814#Comment_82135814

I dont know what you mean im talking about the oba price vs non business price

ballisticbrian

https://forums.moneysavingexpert.com/discussion/comment/82135834#Comment_82135834

OK no worries, you missed out the word "non" in the top post.

ballisticbrian

I've created the following comparison with Hermes thrown in using AI (may contain error / omissions).

The October 2026 Royal Mail price update specifically increases stamp
prices on standard/non-account parcels, tracked, and guaranteed
services, while leaving letter stamps and Mailmark/OBA tariffs
held at their April rates.

Small Parcel Price Comparison (Up to 2kg / Standard Sizes)

Service & Method	2nd Class / Standard (0–2kg)	1st Class / 24-Hour (0–2kg)	Key VAT / Surcharge Treatment
Royal Mail Over-the-Counter (Post Office Counter / Stamps)	£4.60	£5.90	VAT Exempt. No fuel surcharges. What you see is what you pay.
Royal Mail Click & Drop (Retail / Online Consumer)	£3.65 – £4.25	£4.65 – £5.45	VAT Exempt (for standard 1st/2nd Class). Tracked services include 20% VAT.
Royal Mail OBA (Account) (Code CRL / Business Tracked)	~£3.15 – £3.80 (Ex. VAT & Fuel)	~£3.95 – £4.60 (Ex. VAT & Fuel)	Subject to 20% VAT + Variable Fuel Surcharges (typically ~8%–14% extra). Uses average weighting.
Evri Small Parcel (ParcelShop Drop-off)	£3.04 – £3.29 (0–1kg) £3.52 – £4.79 (1–2kg)	£3.90 (0–1kg) £4.60 (1–2kg)	Includes 20% VAT in consumer headline rates. Extra £0.30–£0.95 for home collection.

Critical
Surcharges & Tax Considerations

1. Royal Mail OBA (Online Business Account)

• Fuel Surcharge: Royal Mail adds a dynamic fuel surcharge (calculated monthly, usually hovering between 8% and 14%) to business account billing lines before VAT is applied.
• Green / Peak Surcharges: During peak periods (November–December), account code lines often attract an extra ~5p–10p seasonal surcharge per item.
• Average Weighting Advantage: OBA allows average weighting across your manifest (e.g., sending three 100g parcels and one 1.8kg parcel averages out to 525g per parcel across the batch, reducing total unit costs).
• VAT: Standard 1st/2nd Class on OBA is VAT exempt, but Royal Mail 24/48 Tracked account services carry 20% VAT, which is reclaimable if you are VAT-registered.

2. Royal Mail Click & Drop (Non-Account / Pay-As-You-Go)

• No Surcharges: Click & Drop purchases do not attract separate fuel surcharges or account peak fees.
• Format Penalties: If a parcel exceeds Small Parcel dimensions (45cm x 35cm x 16cm) or 2kg, it drops straight into the Medium Parcel bracket (£7.50+ for 2nd Class).

3. Over-the-Counter (Post Office)

• The "Convenience Trap": Post Office counter stamp rates face the highest price increases under the October update (£5.90 for 1st Class Small Parcel).
• Zero Tax Friction: All standard universal service mail over the counter remains strictly VAT-exempt.

4. Evri Small Parcels

• Strict Size Tiers: Evri's discounted "Small Parcel" rate (45cm x 35cm x 16cm up to 2kg) matches Royal Mail dimensions. However, if you drop off at a ParcelShop rather than paying for collection, you avoid the ~£0.95 collection fee.
• Remote Area Surcharges: Evri adds surcharges (around £2.25–£2.75) for delivery to remote UK postal zones (Highlands, Islands, Northern Ireland), whereas Royal Mail charges a flat universal rate everywhere in the UK.

Strategic Takeaway for E-Commerce

• For items under 1kg: Royal Mail Click & Drop / OBA remains competitive, especially when maintaining universal UK coverage without remote-area penalties.
• For items 1kg–2kg: Evri drop-off (£3.52) significantly undercuts Post Office over-the-counter (£4.60) and Click & Drop base rates.
• If VAT Registered: OBA Tracked 48/24 becomes much cheaper on a net basis once input VAT is reclaimed, even with fuel surcharges factored in.