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Mailchimp is charging VAT now

An update for UK Businesses

…I know we’ve collected all this money, but it’s not actually ours, we need to give it to the UK government!

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Everybody love taxes… NOT!

OK… so taxes are one of those things that nobody likes to pay, but understand that it’s part of “business” and accept it accordingly (they’re a bit like going to the Dentist… you know you need to do it, but it’s likely not top of your “fun things to do” list).

…and if you’re based in the UK, then Value Added Tax (VAT) is something you need to be aware of for business.

…but you may not have known that even if a business is overseas, if it offers a certain type of service in the UK it ‘technically’ needs to charge VAT, and it does this through a scheme called VATMOSS.

Now I’m not an accountant (and any accountant in here who can be more ‘accurate’, I’m happy to update this blog post accordingly – free visibility!!!… email me today!), but if you’re a UK Mailchimp customer…this affects you now.


VAT on Mailchimp business users

From February 17th 2020, Mailchimp are now applying tax to any UK based customers who pay for Mailchimp and use it for business… and so bills have now gone up 20%, and will continue to be at this level forever more.

Why they decided to do it on Feb 17th I can’t find out… and in fact it’s my understanding that they probably should have been doing it well before then… but either way, VAT is now payable on Mailchimp.

So how does this affect you?

Well, if you’re based in the UK, then you likely fall into one of three camps… read on to see what you need to do.

…and a couple of notes.

  • If you are on the Free Account for Mailchimp – Woohoo… no taxes for you! …but remember, if/when you decide to move up to a paid level, you need to build VAT into your plan depending on whether you are VAT registered or not.
  • …and VAT is only on those of us who use Mailchimp for Business purposes… if you’re not using it for business, you can tick the box in your account preferences and VAT won’t be applied to your bill.

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Anyways… here’s where you are in terms of VAT on Mailchimp

  1. You are currently not VAT registered.
    If you’re not VAT registered for whatever reason, you will be paying 20% more for Mailchimp moving forward.  Don’t shout at Mailchimp because of this… shout at HMRC as they’re the one saying VAT needs to be applied.
  2. You ARE registered for VAT and you’ve put your VAT number into the Billing preferences page.
    You don’t need to do anything… your bills will continue to not include VAT as Mailchimp handles this directly with HMRC.
  3. You ARE registered for VAT but you do not have your VAT number on your Billing page.
    Oh dear… well, the good news is that once you get your VAT number onto the page, future bills won’t have VAT on… but it’s likely that your most recent bill (and any other bills you receive before you add your VAT number in) will have VAT applied.
    If this is the case, then you need to contact the billing team at Mailchimp (billing@mailchimp.com) to arrange a refund of the VAT you’ve paid.

So that’s pretty much it.
If you’re not VAT and use Mailchimp for business in the UK, you’ll unfortunately be paying 20% more than you did beforehand.

If you are VAT registered, you’re sorted, you just need to make sure you’ve got your VAT number in your account and claim back any VAT that you shouldn’t have paid.


Commentary

Personally, I don’t begrudge paying taxes, they’re “part of the business game”… but I can’t help feel that this might negatively impact people who want to use Mailchimp but now see the prices going up by 20%.  Mailchimp is a fantastic small business tool and used by many entrepreneurs who are not VAT registered… and so this will affect them the most – Mailchimp’s heartland.

It’s unfortunate, but ‘dems da rules’ when it comes to tax.

I’m also surprised that Mailchimp didn’t do a great job of communicating this to UK business users – hopefully they’ll get an official announcement out soon, but for now, take this as the best info we have available.

VAT is now part of Mailchimp in the UK… 

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Robin Adams

Robin Adams

Robin Adams is a business owner who is passionate about helping businesses build effective marketing systems that work and don't waste money. Having a lifetime of Marketing experience (he's got a degree in Marketing before there were degrees in Marketing!) and having worked for big and small businesses and both client and agency side, he understands not only the theory, but the systems that are required to underpin everything.
51% marketer and 49% Chimp, Robin is the main man behind chimpanswers.com and the Mailchimp Answers Facebook Group - the world's biggest Mailchimp User Group. Connect with him on Linkedin.

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2 Comments

  1. Sheridan Voysey

    Thanks for this information. Yours is the only announcement I’ve heard, so I agree – MailChimp has done a poor job of notifying its customers on this and the costs is now excessively high for non-VAT registered freelance and self-employed people.

    Thanks for your work.

    Reply
    • Robin Adams

      Sheridan, thanks for the comment… I can’t argue that VAT shouldn’t be applied and have a go at Mailchimp about it… but there communication on the issue has been severely lacking…

      Reply

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