Vouchers - FAQs - What Are the VAT Implications for UK Retail Vouchers? (for UK only)

Employers sometimes ask about the VAT treatment of retail vouchers. The question comes from an old ruling, from 2010, which had no impact on Reward Gateway Reloadable Cards or vouchers.

The issue relates to a 2010 European Court of Justice (ECJ) ruling on an appeal by the HMRC, against AstraZeneca, on the VAT treatment of retail vouchers.

AstraZeneca had been employing an unusual practice of buying retail vouchers, claiming them as a business expense and getting a VAT refund, then selling them onto employees without VAT charged on top. HMRC were successful in having this ruled as incorrect, and Astra Zeneca had to repay the VAT.

This ruling had no effect on the Reloadable Cards or Vouchers sold via Reward Gateway.

Because we have always paid and charged VAT on retail vouchers, Reloadable Cards and Instant Vouchers in full and in line with HMRC expectations. This ruling had no effect on our products or services.

Although the ruling had quite wide publicity in the industry, there was very little helpful comment by trade journalists. Had there been, they would have stated that the ruling affects very few companies. 

The practice of employers making a VAT profit on retail vouchers through salary sacrifice was never widespread, and this particular ruling had been long anticipated.