VAT is chargeable on standard goods and services when these are offered by a registered VAT business.
The standard rate of VAT is 20% however there are different VAT rates and exemptions that available. In the UK, there are three different VAT rates, the standard rate @ 20%, the reduced rate @ 5% and the zero rate @ 0%.
The VAT rules are even complex in various circumstances for example when there are discounts or free gifts which are quite normal these days.
Have a look at our VAT Services.
https://www.gov.uk/vat-businesses/discounts-and-free-gifts
We have summarised the main aspects of VAT treatment in various situations:
Discounts and free gifts
Situation | VAT treatment |
Discounts | Charged on the discounted price (not the full price) |
Gifts | Charged on the gift’s full value. There are some specific exceptions on gifts given to the same person if their total value in a 12-month period is less than £50. |
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 paid, VAT due on the price charged |
‘Face value’ vouchers that can be used for more than one type of good or service | ‘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 |
If you are looking to know about VAT, feel free to contact us.