HMRC Guidance: Business promotions (VAT Notice 700/7)

• Scope & purpose: The notice explains how VAT applies to business gifts, samples, promotions, coupons, vouchers, cashbacks, loyalty schemes, and trade/consumer promotions, clarifying when VAT is due, recoverable, or disregarded. It replaces Notice 700/7 and excludes sponsorship, business entertainment, and detailed retail scheme mechanics.
• Core VAT principles:
  • Business gifts: VAT is due on gifts where input tax was recovered, unless within the £50 per recipient per 12‑month limit; samples meeting the legal definition are outside the scope of VAT.
  • Promotions & non‑monetary consideration: “Free” or discounted items may still be taxable where linked to a supply or service; VAT is based on the full value of consideration, including non‑monetary elements.
  • Cashbacks & discounts: Cashbacks generally reduce the taxable value for manufacturers and input tax for recipients; discounts reduce VAT only on the discounted price.
• Vouchers & schemes (key complexity):
  • Clear distinction between single‑purpose vouchers (VAT due on issue) and multi‑purpose vouchers (VAT due on redemption), with detailed rules for intermediaries, unredeemed vouchers, and post‑2019 changes.
  • Specific VAT treatments for coupons, loyalty points, trade rewards, and consumer promotions, emphasizing audit trails, correct valuation, and when supplies are deemed to occur.

Contents

• Detail
• 1. Overview
• 2. Gifts of goods
• 3. Gifts of services
• 4. Samples
• 5. Non-monetary consideration and business promotions
• 6. Promotions of goods or services for a single price
• 7. Coupons
• 8. Face value vouchers issued before 1 January 2019
• 9. Vouchers from 1 January 2019
• 10. Cashbacks
• 11. Loyalty schemes
• 12. Manufacturer’s trade promotions
• 13. Manufacturer’s consumer promotions
• 14. Retail discount schemes
• Your rights and obligations
• Help us improve this notice
• Putting things right
• How we use your information

Source gov.uk

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