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HMRC internal manual

VAT Valuation Manual

HM Revenue & Customs
, see all updates

Specific applications: business gifts and samples: gifts on which VAT is not due

Gifts that do not constitute supplies are:

  • goods that cost less than £50 (excluding VAT) during any twelve month period to the same person. These must be given for business reasons. Prior to 1 October 2003, there were additional rules relating to a series and succession of gifts to the same person - see VATSC22300 (Supply and consideration). However where the total cost of the business gifts exceeds £50 and the donor has an entitlement to reclaim VAT, then they will have to account for VAT on the total cost value of all the gifts for the period.
  • a free meal given by an employer to an employee (See VATSC23000).

Gifts that are supplies but qualify for zero-rating are:

  • goods given to a charity for sale or export by it; and
  • goods given to a taxable person, such as a charity’s trading subsidiary, covenanting all the profits of sale to a charity.