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HMRC internal manual

VAT Valuation Manual

Specific applications: Cover-mounted goods and promotional items in magazines

The linked supplies concession

Traders will often link a minor article with a main supply (which may be goods or services) and sell these together at a single price. This selling price may then have to be apportioned to reflect any different VAT rates applicable to the two supplies. However, a concession currently exists under which in certain circumstances the minor article can be regarded as having the same liability as the main supply. These are where the minor article:

  1. Is not charged to the customer at a separate price, and
  2. Costs the supplier no more than 20% of the total cost to him of the combined supply (excluding VAT), and
  3. Costs the supplier no more than:
* £1 (excluding VAT) if included with goods intended for retail sale, or
* £5 (excluding VAT) in other cases

You are likely to encounter this situation most frequently where magazines are supplied with “cover-mounted” goods, such as make-up, children’s toys and CD’s. The items accompanying the magazines may be a regular part of a “package” issued periodically comprising the magazine plus the article or they may be one-off or infrequent promotions. It should be considered whether the ‘cover-mounted’ goods are the main items being purchased, if so, the publication is ancillary.

Questions on this subject should be put directly to the VAT Supply Policy Team.