From 1st January 2019, HMRC has made changes to the VAT treatment of gift voucher sales. The new rules now refer to ‘single purpose vouchers’. A single purpose voucher will be one where, at the time of issue, both the liability to VAT and the place of supply of goods or services are known. Any VAT due on those goods or services is paid at the point of issue of the voucher. Prior to 1st January 2019, the tax point for VAT purposes was when the voucher was redeemed. As VAT is now not payable when single purpose vouchers are redeemed, manual adjustments will need to be made to bookkeeping entries.
To clarify, the multi-purpose voucher rules have not changed - any VAT due is only payable when the voucher is redeemed for goods or services.