Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

VAT definition

What does VAT mean? VAT is a consumption tax on most supplies of goods and services made by taxable businesses to businesses or consumers. In practice, it underpins pricing (plus VAT), invoicing, cross‑border trade and many property transactions. The charge and key concepts are set out in the UK Value Added Tax Act 1994 and, in Ireland, the Value‑Added Tax Consolidation Act 2010 (implementing the EU VAT Directive). In Northern Ireland, EU VAT rules continue to apply to goods under the Windsor Framework; services follow UK rules. Core features include: output tax charged at standard, reduced or zero rates; exempt supplies (for example, certain...

UK VAT treatment of vouchers under FA 2019 and VATA 1994 Schedule 10B: single- and multi-purpose rules, tax points, valuation and intermediaries

Published by a LexisNexis Tax expert

Practice notes

Background

On 27 June 2016, the Council of the European Union adopted targeted rules governing vat treatment of vouchers via Council Directive 2016/1065 (the Vouchers Directive (EU) 2016/1065). That directive modifies Council Directive 2006/112/EC. Its purpose is to secure consistent, harmonised VAT outcomes for vouchers across Member States. The framework applies to vouchers issued after 31 December 2018. Before then, the EU lacked a common definition of a voucher, and some cross-border voucher dealings escaped VAT or suffered double charge. Following an HMRC consultation running from 1 December 2017 to 23 February 2018, the Finance Act 2019 (FA 2019) implemented the Vouchers Directive into UK law for vouchers issued on and after 1 January 2019. The measures sit in FA 2019, s 52 and Sch 17, constituting Schedule 10B to the Value Added Tax Act 1994 (VATA 1994). Although the UK left the EU on 31 January 2020, these rules continue to have effect, having been enacted into domestic legislation. This Practice Note contains references to EU directives...

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Web page updated on 22/05/2026

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