Charge, reclaim and record VAT

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VAT on discounts and gifts

There are different rules for charging VAT on discounts, gifts and free services.

Charging VAT on discounts

For basic discounts (for example, a 20% off discount), charge VAT on the discounted price.

Multi-buy offers

Multi-buy offers are where the customer gets a discount for buying more items, for example 3 items for £20.

For multi-buy offers where all the items have the same VAT rate (usually standard rate), charge VAT on the combined price.

If the items in the offer have different rates of VAT, you need to use a method called ‘apportionment’.

Read section 8 of the guidance to VAT rules and procedures to find out how ‘apportionment’ works.

Link-save offers are where the customer gets a discounted (or free) second item with their purchase, for example ‘buy one, get one free’.

Use ‘apportionment’ to work out the VAT, unless the free or discounted item:

  • has a resale value of less than £1
  • has a sale value of less than £5
  • costs you less than 20% of the total of the other items in the offer
  • is not sold at a separate price from the main product

If any of the above apply, charge VAT on the combined value of items.

Charging VAT on coupons or vouchers

Do not charge VAT on either of the following:

  • a money-off coupon or voucher you give away free with another item at the time of purchase
  • ‘face value’ vouchers that can be used for more than one type of good or service (if sold at or below their monetary value)

Charge VAT when a customer uses a ‘face value’ voucher to buy something from you. If you sold the voucher at a discount, charge VAT at the discounted value.

VAT on gifts

You do not owe VAT if either of the following apply:

  • you’re giving away your own goods and services
  • the total value of gifts given to the same person in a 12-month period is less than £50

VAT on free goods and services

You usually do not owe VAT on goods and services you give away for free.

Item or service Condition to meet to be exempt from paying VAT
Free samples Used for marketing purposes and provided in a quantity that lets potential customers test the product
Free loans of business assets The cost of hiring the asset is included in something else you sell to the customer
Free services You do not get any payment or goods or services in return
View a printable version of the whole guide

Part of Export goods from the UK: step by step

  1. Step 1 Check if you need to follow this process

    Follow these steps if you're moving goods permanently from:

    • England, Wales or Scotland (Great Britain) to a country outside the UK
    • Northern Ireland to a country outside the UK and the EU

    What you need to do is different if you are:

    1. Learn about exporting, including making export plans, on Business.gov.uk

  2. Step 2 Check the rules for exporting your goods

    1. Check duties, rules and restrictions for your goods in the destination country

  3. and Apply for any licences you need to export your goods

    There are special rules and you may need to get licences or certificates if you are exporting any of the following:

  4. Step 3 Get your business ready to export

    You need an EORI number that starts with GB to export goods from England, Wales or Scotland.

    If you move goods to or from Northern Ireland you may need one that starts with XI.

    1. Get an EORI number
    1. Check if you need to register for VAT

    There are processes that can make clearing customs quicker and easier to manage if you export goods regularly.

    1. Find out about using simplified declaration procedures
    2. Check if you can use Common Transit to move your goods
    3. Check if Authorised Economic Operator status is right for you

  5. and Check whoever's receiving the goods can import them

    The business or person receiving the goods may need:

    • to make an import declaration in their country
    • licences or certificates to receive goods from the UK

    Check whoever you are sending the goods to is able to import them into their country.

  6. Step 4 Decide who will make export declarations and transport the goods

    You can hire someone to deal with customs and transport the goods for you, or you can do it yourself.

    1. Find out how to hire someone to deal with customs for you
    2. Find out how to make export declarations yourself
    3. Find out how to transport goods out of the UK by road

  7. Step 5 Classify your goods

    You must find the right commodity code to classify the goods you're exporting.

    Your customs agent or transporter might be able to help you with this.

    1. Find the right commodity code for your goods

  8. Step 6 Prepare the invoice and other documentation for your goods

    The completed invoice and any licences or certificates must travel with the goods.

    When filling in the value of your goods on the invoice, use the price you’re selling them for. If you're not selling the goods, use the market value of the goods. List any freight or export insurance you included in the price separately.

    You may need proof of origin if exporting to a country where your goods have a reduced or zero rate of duty.

    1. Get proof of origin for your goods

    You might be able to zero rate the goods for VAT. This means you can charge your customers VAT at 0%.

    1. Check if you can zero rate the goods for VAT

  9. Step 7 Get your goods through customs

    If you've appointed someone to deal with UK customs for you, they'll make the declaration and get your goods through the UK border.

    1. Make an export declaration and get your goods cleared by UK customs

    You may need other documentation to get your goods into the destination country. Ask the person or business buying your goods what information you need to provide.

    1. Check how to bring goods back into the UK if they were rejected for import at another country’s border

  10. Step 8 Keep invoices and records

    You must keep commercial invoices and any customs paperwork.

    If you're VAT registered, record the goods in your VAT accounts even if they are zero-rated.

    1. Find out how to record the goods in your VAT accounts

    If you exported controlled goods, for example firearms, keep the paperwork that shows who owns the goods.