Business gifts and samples

Produced by Tolley

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Business gifts and samples
  • What are not usually treated as business gifts?
  • What are treated as business gifts?
  • What types of goods could be treated as gifts?
  • What is treated as a gift of services?
  • What is the VAT treatment of prizes / rewards issued to self-employed individuals?
  • What is the treatment of gifts made via an intermediary?
  • When is VAT due on gifts?
  • Gifts used for business purposes by the recipient
  • What is the VAT treatment of gifts given at sporting or entertainment events?
  • More...

Business gifts and samples

This guidance note provides an overview of the VAT treatment of supplies of business gifts and samples. A gift of business assets is treated as a supply of goods for VAT purposes which is liable to VAT at the relevant rate unless it comes within one of the exceptions mentioned in ‘What are not usually treated as business gifts?’ below when different VAT rules will most likely apply.

What are not usually treated as business gifts?

Businesses that are involved in providing ‘gifts’ in the following situations may not come within the scope of the business gift rules explained in this guidance note and they should refer to the relevant guidance note for more information on the relevant VAT treatment.

  1. there is no supply (and no VAT liability arises) on a gift of goods made in the course or furtherance of a business where ‘the cost to the donor of acquiring or producing the goods’, together with the cost of any other such business gifts made to the same person within a 12 month period, was not more than £50 (excluding VAT). Please note that the £50 relief only applies to gifts made in the course or furtherance of business. Therefore, if a gift is made for non-business purposes, including those applied to personal use (eg a gift to a relative or friend), it is not a business asset and as a result the VAT incurred is not input tax so cannot be recovered

  2. samples (see below)

  3. no VAT is due on free meals or drinks to employees by way of catering or the provision of accommodation for employees in a hotel ― see the Overview of VAT recovery on employee related expenses and Business and staff entertainment guidance notes

  4. where certain additional goods or services are offered together with normal taxable supplies as part of a business promotion ― see the Vouchers ― VAT treatment from 1 January 2019, Coupons

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