Finance Bill 2019 proposes changes to the VAT treatment of vouchers. HMRC has also published a consultation response, ‘VAT and Vouchers – summary of responses’. The law transposes the EU Vouchers Directive 2016/1065 into UK law.

From 1 January 2019, the UK law on VAT and Vouchers is changing due to the deadline enforced by the EU’s Vouchers Directive.

Single purpose vouchers (SPVs)

  • SPVs are vouchers where the Place of supply of the goods or Place of supply of the services, and the vat liability on the supply are known at time of issue. This widens the current UK definition.
  • There will be a deemed supply of the underlying goods or services at the time of voucher issue or time of any transfer by a taxable person acting in their own name.
  • The redemption and handing over of goods or services is not a separate transaction.
  • VAT is due at payment for the voucher, not at redemption. This is in line with the normal Time of supply rules on payments.

Multi-purpose vouchers (MPVs)

  • An MPV is a voucher which is not a SPV.
  • VAT rate is not known at time the voucher is issued.
    • VAT is accounted for by the redeemer on what has been provided in exchange for the voucher
    • The value of the supply is consideration paid for the voucher, or where not known, the face value.


  • SPVs         
    • Distributors buying and selling SPVs make a supply of the underlying goods or services.
    • Intermediary agents acting on behalf of someone else do not make a supply of the underlying goods or services. VAT will only be charged by them on their commission.
    • This is effectively the same as the existing Agents and Principals rules.
  • MPVs
    • Distributors are not making a supply for VAT purposes.
    • Agents acting on behalf of a principal only make a supply of their agency services.

As part of HMRC’s consultation response, 'VAT and Vouchers', they have assured taxpayers that guidance will be sufficient to cover areas that are deemed to be complicated, including:

  • The distinction between tickets, payment systems, and postage stamps compared to vouchers.
  • Where goods or services are supplied by a redeemer in exchange for an MPV, the redeemer will be able to recover any VAT in accordance with normal rules on VAT recovery.
  • The normal place of supply rules will apply to cross-border SPVs and MPVs.
  • Guidance will cover how to deal with vouchers used as part payment.
  • Retail schemes guidance will be updated.

These changes follow an December 2017 consultation, ‘VAT and Vouchers’.

The draft legislation can be read in full here and the consultation response here.


Discounts, Reward Schemes & Vouchers: VAT

VAT and vouchers: consultation


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