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.