Pub gift vouchers at Christmas: when the VAT is due, whether they can expire, and the till trap that taxes them twice

A pub gift voucher that can only be spent on food and drink in the pub is a single-purpose voucher, so the 20% VAT is due the day you sell it, not the day it's spent. If it can also be spent on something at a different VAT rate, cold takeaway food or zero-rated shop goods for example, it becomes multi-purpose and the VAT waits until it's redeemed. There's no legal minimum expiry date in the UK, but the buyer has to be told the expiry when they buy it. And unless your till is set up for it, every voucher can end up taxed twice or showing as stock loss.

Christmas is when vouchers sell, so this is the month to get it right. Search for it and you get accountants' forum threads, a salon software help page and a 2020 piece about the old 5% hospitality rate. Nothing written for a pub. So here's the whole thing on one page: the VAT, the expiry, the till, the stocktake and the change-of-tenancy problem nobody mentions.

Single or multi-purpose: the one question that sets your VAT

Since 1 January 2019 HMRC splits vouchers in two. The test is whether you know, on the day you sell it, what VAT rate the stuff it buys will carry.

• Single-purpose voucher (SPV). Everything it can be spent on carries one VAT rate, and it's spent in the UK. VAT is due when you sell it. When it's redeemed, there's no more VAT to pay because you've already paid it.
• Multi-purpose voucher (MPV). Anything that isn't single-purpose. No VAT when you sell it. VAT is due on what the customer actually buys when they spend it.

HMRC's own example is close to a pub. In VAT Notice 700/7 a cinema voucher that can be spent on a film ticket, food eaten in the cinema or merchandise is single-purpose, because "these are all standard rated supplies". Food eaten in, drinks and a room for the night are all 20% in a pub. So a voucher limited to those is single-purpose. That's my reading of HMRC's example, not a ruling for your pub.

The trap is in paragraph 9.4.5 of the same notice. If a voucher can be spent on things that are normally one rate but "in specific circumstances might also have a different liability", it can't be single-purpose "unless one or other use is specifically excluded". In a pub that means cold takeaway sandwiches, a farm shop counter, or anything else zero-rated. If your voucher could be spent on those, it's multi-purpose. Either exclude them in the wording or tell your accountant you're selling MPVs.

What happens to the VAT on a £25 pub voucher

	Single-purpose (eat-in food and drink only)	Multi-purpose (could buy zero-rated items too)
Sold in December	£4.17 VAT due on the December sale	No VAT yet
Spent in February on drinks	No further VAT	£4.17 VAT due on the redemption
Never spent	VAT already paid, no adjustment	No VAT ever due
Half spent	No adjustment for the unspent half	VAT only on what was bought

£4.17 is the VAT inside £25 at 20% (£25 ÷ 6). The unspent rows are straight from HMRC: for a single-purpose voucher "no VAT adjustment can be made if the voucher is not used or not used for its full value, unless a refund is made", and for a multi-purpose one, "if the voucher is never used there is no VAT to be brought to account".

The till trap: paying the VAT twice

This is the bit that costs real money and I've not seen anyone in the trade write it down. Most tills treat anything you ring through a sales key as a sale with VAT in it.

So picture it. You ring a £25 voucher through a "gift voucher" key that's set up as a normal sale. VAT £4.17, fine if it's single-purpose. In February the customer comes in, has two meals, and you ring the meals up as sales and take the voucher as payment. The till reports £25 of sales again, with another £4.17 of VAT in it. Two sales, one lot of food. If your VAT return is built straight from the till's sales report, you've just paid HMRC £8.33 on £25 of takings.

Sell 100 vouchers at £25 over Christmas and that's £417 of VAT you didn't owe, out of your pocket, unless your accountant spots it. The fix depends which type you sell:

• Single-purpose: the sale of the voucher carries the VAT. When it's redeemed, the meal still has to go through the till (you need it for your stock and GP figures, more on that below), but the voucher payment needs to be on a tender your accountant knows to strip out of the VAT, or a key your EPOS supplier sets up to carry no VAT.
• Multi-purpose: the sale of the voucher should go through a key with no VAT, like a deposit or a float. The VAT happens when the meal is rung up on redemption, which is exactly what your till does anyway.

Every EPOS does this differently, so ask your supplier one question: "how do gift voucher sales and voucher payments show on my VAT report?" Then tell your accountant which type you sell. Two emails, and it's sorted before the first voucher goes out. My pub VAT guide covers the rest of the return.

The stocktake trap: vouchers that look like theft

The other way to get this wrong is to wave the voucher customer through. Someone hands over a £25 voucher, the bar staff take it, pour two pints and a glass of wine, and nothing goes through the till because "it's already paid for". Perfectly honest. And at the next stocktake those drinks are missing stock with no sale against them.

That's a variance you'll spend an evening chasing. Every redemption should be rung up as a normal sale with the voucher as the payment method, so the stock comes off and the sale goes on. It's the same problem as unrecorded freebies, which I've written up in comps and freebies, and the same check that sorts out a till that won't match the stocktake.

Can you put an expiry date on a pub voucher?

Yes. There's no UK law setting a minimum. Which? put it plainly in December 2024: gift cards in Ireland must be valid for at least five years, "but in the UK, there are no such regulations". The condition is that the expiry has to be clear when the voucher is bought. Which? again: "Expiry dates are allowed as long as the person buying the voucher was made aware of this at the time of purchase."

So print it on the voucher and say it at the bar. I'd go for 12 months from the date of sale. It's long enough that nobody feels caught out, and short enough that you're not carrying a liability for years. A very short expiry on a voucher someone's paid full price for is the kind of term that can be challenged as unfair under the Consumer Rights Act 2015, so I wouldn't push it.

One idea worth stealing: sell vouchers in pounds, not in pints. Alcohol duty goes up on 1 February 2027, about 2.3p on a 4.5% pint before VAT, as I worked out in the Budget 2026 guide, and most brewers move their prices round the same time. A "voucher for two pints" sold at December's price and spent in March is redeemed at March's cost. A £10 voucher is still £10.

What vouchers mean for your books

The money from a voucher isn't takings yet. It's money you owe in food and drink. Accotax, a UK accountancy firm, describes it as sitting "on your Balance Sheet as a current liability, which is often referred to as Deferred Revenue or Gift Card Liability". It only becomes sales when the voucher is spent, or when it expires and you're no longer obliged to honour it, at which point "the business can then recognise the unspent money as revenue".

That matters at Christmas because voucher cash lands in December, when the bank looks healthy, and gets spent in January and February, when it doesn't. If you treat the December voucher money as spending money, you'll be serving those customers in a quiet January with nothing coming in for it. Ring-fence it. My money in, money out guide has a simple way of keeping it separate.

Some vouchers never come back. The best published figure is old: a 2014 government release quoted the UK Gift Card & Voucher Association saying 6% of vouchers go unused. I'd plan for every voucher being spent and treat anything else as a bonus.

The change-of-tenancy problem

Vouchers are a promise from your business, not from the building. If you sell vouchers this Christmas and leave the pub in the spring, the new licensee isn't automatically bound to take them. Which? says that when a business is bought, old vouchers "are sometimes accepted", which tells you it's down to the new owner. And if a business goes bust, R3, the insolvency trade body, says voucher holders "will become 'unsecured creditors'" and there's "no statutory requirement" for an administrator to honour them.

Behind a bar, that turns into a regular holding a voucher your successor won't take, and the regular blaming the pub. If you're tied and your agreement ends next year, either keep the expiry date inside your term or agree with the incoming tenant what happens to vouchers before you go. My lease assignment guide covers the rest of the handover.

A voucher register you can copy

Number every voucher. Keep one line per voucher. That's the whole system, and it stops photocopied vouchers too.

Gift voucher register: one line per voucher

No.	Date sold	Value	Paid by	Expires	Redeemed on	Amount used	Till receipt no.
0001	05/12/26	£25	Card	05/12/27	14/02/27	£25	4417
0002	05/12/26	£50	Cash	05/12/27

At any point, the total of the unredeemed lines is what you owe. Give that figure to your accountant at year end, and check the "redeemed on" lines match voucher payments on the till. If you use my free cash-up sheet, add voucher sold and voucher redeemed as two lines on the daily tab.

My take

Vouchers are good business at Christmas. Cash up front, people bringing friends in January, and somebody's present is a meal at your pub. Just decide which type you're selling before you print them, word them to match, get the till keys right, and ring every redemption through. Do those four things and a voucher is a sale. Skip them and it's a VAT bill, a stock loss and an argument with a regular.

Common questions

Do I charge VAT on a pub gift voucher when I sell it?

If it can only be spent on food and drink consumed in the pub, which are all 20%, it's a single-purpose voucher and VAT is due when you sell it. If it could also be spent on zero-rated items like cold takeaway food, it's multi-purpose and VAT is due when it's spent instead.

Can a pub put an expiry date on gift vouchers?

Yes. There's no minimum expiry period in UK law, but the buyer must be told the expiry date when they buy the voucher. Print it on the voucher. Twelve months is a fair, common choice.

What happens to VAT if a voucher is never used?

For a single-purpose voucher the VAT was paid when it was sold and HMRC allows no adjustment unless you refund it. For a multi-purpose voucher no VAT is ever due if it's never spent.

Do I have to honour vouchers sold by the previous licensee?

Not automatically. Vouchers are a debt of the business that sold them. Whether a new owner accepts them is their decision, so agree it at handover if you can.

Why does a voucher redemption show as stock loss?

Because the drinks or food were served without a sale going through the till. Ring every redemption up as a normal sale and take the voucher as the payment, so the stock and the sale both get recorded.