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HMRC internal manual

VAT Betting and Gaming Guidance

Machine games: treatment of tokens and prizes awarded from machines: machines awarding prizes of goods

Some machines reward successful players with goods directly from the machine, instead of cash or tokens that can be exchanged subsequently. The most common example of this are crane grab machines, where the player pays to operate a small crane with the opportunity of grabbing a prize from amongst a selection of small goods. These prizes are to be treated as business gifts for VAT purposes, and the trader will only have to account for VAT where the VAT-exclusive cost of the prizes to him exceeds £50 each.