V16.403 VAT—treatment of vouchers from 1 January 2019

Part V16 Forms and other HMRC material

V16.403 VAT—treatment of vouchers from 1 January 2019

V16.403 VAT—treatment of vouchers from 1 January 2019

Who is likely to be affected?

Businesses such as retailers and distributors that are engaged in the buying, selling or redemption of vouchers.

General description of the measure

The government will implement an EU Directive on the VAT treatment of vouchers in time for the required date of 1 January 2019. This will simplify the rules for the tax treatment of vouchers, especially where they can be used either in the UK or more widely in the EU. This will prevent either non-taxation or double taxation of goods or services which relate to vouchers.

On 23 June 2016, the EU referendum took place and the people of the United Kingdom voted to leave the European Union. Until exit negotiations are concluded, the UK remains a full member of the European Union and all the rights and obligations of EU membership remain in force. During this period the Government will continue to negotiate, implement and apply EU legislation. The outcome of these negotiations will determine what arrangements apply in relation to EU legislation in future once the UK has left the EU.

This measure introduces legislation providing for the VAT treatment of vouchers issued on or after 1 January 2019. It affects only vouchers for which a payment has been made and which will be used to buy something. The measure does not apply to vouchers issued before 1 January 2019, for which existing rules will continue to apply.

Vouchers, in this context, are gift cards and gift tokens,

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