VAT may have to be charged on discounts and deals.
|Offer||How to charge VAT|
|Discounts||Charged on the discounted price (not the full price)|
|Gifts||Charged on the gift’s full value – there are some exceptions listed below|
|Multi-buys||Charged on the combined price if all the items have the same VAT rate. If not, VAT is ‘apportioned’ as mixed-rate goods|
|Money-off coupons, vouchers etc||No VAT due if given away free at time of a purchase. If not, VAT due on the price charged|
|‘Face value’ vouchers that can be used for more than one type of good or service||No VAT due, if sold at or below their monetary value|
|Redeemed face value vouchers||Charged on the full value of the transaction|
|Redeemed face value vouchers sold at a discount||Charged on the discounted value of the transaction|
|Link-save offers (buy one get one free or discounted)||VAT is apportioned as mixed-rate goods – there are exceptions|
Exceptions for gifts and link-save offers
There’s no VAT due on gifts given to the same person if their total value in a 12 month period is less than £50.
VAT is charged on the combined value of link-save items if the incentive product:
- has a resale value of less than £1
- has a sale value of less than £5
- costs you less than 20% of the total of the other items in the offer
- isn’t sold at a separate price from the main product
Free goods and services
You don’t have to pay VAT on things like free samples if they meet certain conditions.
|Supplies||Condition to meet so no VAT due|
|Free samples||Used for marketing purposes and provided in a quantity that lets potential customers test the product|
|Free loans of business assets||The cost of hiring the asset is included in something else you sell to the customer|
|Free gifts||The total cost of all gifts to the same person is less than £50 in a 12 month period|
|Free services||You don’t get any payment or goods or services in return|