[1] It superseded the short-lived Penny Venetian Red because the Customs and Inland Revenue Act 1881 necessitated new stamps that were valid for use as both postage and revenue stamps, and so the Penny Lilac was issued in that year, inscribed "POSTAGE AND INLAND REVENUE".

The oval design of the Penny Lilac was adapted from that used for revenue stamps in Britain from the early 1860s.

In that respect it represented a break with 40 years of tradition in postage stamp design.

The use of the colour lilac for low-value definitives was extended in 1884 when other low-value stamps were issued in lilac, with green then being used for higher-value stamps.

The Penny Lilac was a surface-printed stamp and was issued in two forms: Penny Lilac stamps are often found as perfins—that is, with initials or insignia added as perforations to mint stamps, which meant that they could not be redeemed for cash at a post office.