Value Added Tax Act 1994 Schedule 10A paragraph 7

Vouchers supplied free with other goods or services

Paragraph 7 of Schedule 10A deals with the VAT treatment of face-value vouchers that are given away as part of a combined transaction with other goods or services, where the overall price charged is essentially the same as it would have been without the voucher.

• Where a face-value voucher (other than a postage stamp) is supplied alongside other goods or services to the same person as part of a single composite transaction, and the total price is unchanged or not materially different from what it would be without the voucher, the voucher is treated as supplied for no consideration.
• This means no VAT is due on the voucher element of the transaction at the point it is given away, because it is deemed to have been supplied free of charge.
• The rule prevents businesses from having to apportion the selling price between the voucher and the other goods or services when the customer has not effectively paid anything extra for the voucher.
• Postage stamps are specifically excluded from this provision, so different rules apply to stamps even if they are supplied in similar circumstances.