Free samples, gifts and own use: when VAT still applies

VAT is normally charged when you sell. But in some cases, the law treats goods or services you give away or use yourself as a deemed supply — and VAT is due as if you had sold them.

Common cases

• Gifts and free samples beyond the small-value limit set in the regulations.
• Goods taken from the business for the owner's or employees' personal use.
• Business assets kept when the business deregisters from VAT.

Why it applies

If you deducted input VAT when you bought the item, giving it away for free without accounting for VAT would leave it untaxed. The deemed supply rule closes that gap.

How it is calculated

Generally on the cost of the goods or services — not on a selling price.

Practical tips

• Keep a log of samples and gifts, with value and recipient.
• Separate promotional stock from stock for sale in your system.
• Review staff benefits paid in kind with your accountant.

Small promotional items within the limit are usually fine — large or frequent gifts need attention.