VAT on samples, gifts and goods for creator posts
Record each stock movement by its real purpose and what the recipient agrees to do. Genuine free samples can escape output VAT; unconditional business gifts need a recipient cost check; goods exchanged for promotional work are barter. Keep the agreement and valuation evidence. Factory and batch records can be gathered by Cambridge China Bridge.
Classify the arrangement before dispatch
Ask whether the recipient is evaluating the product, receiving an unconditional present, or providing agreed promotional work in exchange. A gift involves no obligation to give anything back. Goods conditional on a post, video or other service are supplies for non-monetary consideration. Calling the parcel a sample does not settle its VAT treatment.
Save the messages and brief alongside the dispatch record. Distinguish a hope that someone mentions your product from an agreed deliverable. If the wording is unclear, settle it before releasing stock. This guide concerns goods supplied from your UK batch; ask for a separate VAT review where goods or creators are overseas.
Use the sample treatment only for genuine evaluation
HMRC's sample definition requires a specimen that promotes sales and allows the product's characteristics and qualities to be assessed. It excludes final consumption except where consumption is inherent in that promotional assessment. Qualifying samples supplied free for marketing are not liable to VAT. Quantities beyond what is necessary for assessment do not qualify.
Record the product being promoted, who will assess it and why the quantity is needed. Explain why a complete retail unit is needed where relevant, rather than relying on a sample sticker. Ask the relevant product safety authority to confirm which obligations apply when supplying goods free of charge, using our promotional merchandise guide to prepare your questions.
Track unconditional gifts by recipient
For business gifts, no output VAT is due where the total cost to the same person does not exceed £50 excluding VAT in any 12-month period. If the total exceeds that limit and you were entitled to reclaim input VAT, output VAT normally applies to the total cost value of all those gifts, not just the excess.
Maintain a recipient register across campaigns and dispatch channels. Attach cost evidence and earlier gift entries before approving another parcel. Keep the threshold check separate from the VAT valuation calculation. Ask your accountant to confirm both, including input VAT entitlement. Gifts to family for private purposes belong in the private stock withdrawal guide.
Treat agreed promotional work as an exchange
Goods supplied in return for promotional services are barter: the goods and the services are separate supplies. For VAT valuation, non-monetary consideration normally uses the VAT-exclusive price a customer would pay if paying entirely in money. Do not automatically use factory purchase cost or assume that receiving no cash removes the VAT issue.
Keep the agreed work, goods supplied, valuation basis and completion evidence together. Ask your accountant to record the goods supplied and promotional service received separately, and check each party's VAT position and invoicing. Do not automatically cancel the entries against each other. Flag any additional cash payment or uncompleted work for review.
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Make the stock log explain every unit
Use distinct movement reasons for samples, business gifts and promotional exchanges. Record dispatch date, recipient, product code, batch, quantity, original attributable cost, agreement reference and VAT decision. Reduce available stock at your agreed dispatch event. Our pick and pack guide covers selling units and preventing duplicate deductions.
Reconcile these movements with remaining stock, sales, returns and damaged goods. Keep original stock cost separate from any VAT valuation and show the accounting entry reference. Ask your accountant to choose the expense or exchange entries rather than posting every parcel as a stock loss. Cambridge China Bridge's own staff in China can help gather supplier invoices and batch identification.
Frequently asked questions
Is a free product sent to a creator a VAT sample?
Only if it meets HMRC's sample definition. Record the evaluation purpose and quantity needed. If the creator agrees to promotional work in return, check barter treatment.
Does the £50 business gift limit apply per parcel?
No. It applies to the total cost excluding VAT of gifts to the same person in any 12-month period. Keep a recipient register across campaigns.
Is VAT due on goods exchanged for a creator post?
An agreed post in return for goods is non-monetary consideration. Check the goods supply and service separately, including VAT status and valuation; no cash payment does not settle the treatment.
How do I record samples taken from imported stock?
Record recipient, date, product code, batch, quantity and purpose, then reduce available stock. Attach the agreement, cost evidence and VAT decision so the movement can be reconciled.