- VAT treatment for business promotions is complex due to changes in EU and UK legislation and case law.
- Main considerations include whether a supply exists and its value.
- Discounts: VAT is charged on the discounted price.
- Gifts: VAT is charged on the full value unless total gifts to one person are under £50 annually.
- Multi-buys: VAT is charged on the combined price if items have the same VAT rate; otherwise, it is apportioned.
- Money-off coupons and vouchers: No VAT if given free at purchase; otherwise, VAT is on the price paid.
- Multi-purpose face value vouchers: No VAT if sold at or below monetary value.
- Single-purpose face value vouchers: VAT is charged on the value when issued.
- Redeemed face value vouchers: VAT is charged on the full transaction value.
- Free goods and services: No VAT if conditions are met, such as marketing samples or gifts under £50 annually.
- Face value vouchers entitle holders to goods or services up to the voucher’s value.
- Single-purpose vouchers are for one type of goods or services at a single VAT rate.
- Multi-purpose vouchers are for multiple goods or services or rates.
- Incorrect VAT handling may lead to financial penalties.
Source: fiscal-requirements.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
