VAT and vouchers

The measure

Following consultation the government will implement legislation on the VAT treatment of vouchers. 

Under current UK VAT legislation, the customer is deemed to be receiving two supplies: a voucher and an underlying supply of goods or services. Draft legislation released in July 2018 makes it clear that for VAT purposes there will no longer be a separate supply of a voucher. Instead, the rules will be simplified so that there is only the supply of the underlying goods or services.

This should prevent either non-taxation or double taxation of goods or services that relate to vouchers, ensuring that the correct amount of VAT is charged on what the customer pays, irrespective of whether the payment is with a voucher or other means of payment.

Who will be affected?

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

When will the measure come into effect?

This measure is in respect of vouchers issued on or after 1 January 2019. 

Our view

Further to the publication of draft legislation in July 2018 this was an expected measure, which, in light of the EU Vouchers Directive 2016, must be implemented by Member States by 31 December 2018. 


Mark Groom

Mark Groom


Global Employer Services Policy Lead