Instructables

VAT on prizes for UK contest winners

I know from the official rules that UK contest winners take responsibility for any VAT due on prizes, but was just wondering if any previous UK winners could let us know what normally happens? Do you end up paying VAT on the market value of the prize? I've sometimes seen the courier pay this on your behalf and charge you before they'll deliver it so maybe this will happen.

For any non-UK members reading this, VAT is a sort of sales tax (currently 20%). If you'd won a UK-based contest it wouldn't be an issue as the purchaser would have paid it. If you buy something from abroad you have to pay VAT as it comes into the country. I've no idea about a prize.

I recently won something in the Make it Real challenge, so if nobody can tell me then I'll be answering this myself when it arrives.

I could be wrong, but from what I read VAT is charged on goods and services that you buy, and I couldn't find any reference to that on prizes....
fred27 (author)  canucksgirl1 year ago
I *think* it's done on the market value of a product rather than what you paid - to stop people misrepresenting the value of something they purchased. I really can't find anything definite about prizes though.

I suspect the government wants their cut and doesn't care whether Instructables purchased it or I did. At least we don't have the weird US thing where you have to pay income tax.
Well we have something similar, but again its on things that we purchase across the border. They want to see receipts and then they determine if and how much you have to pay to bring what you bought home.

In my case, I've won a prize in a contest here, and when they sent it to me I had to pay nothing. Of course, I can't speak for how it works in all countries, but from what I read on the U.K. govt website, the charges appear to all be in respect to what you buy and not what you win.
I won a macbook pro and I live in Toronto Canada and had to pay over $350 in "Sales" tax to get the package from the post office.
Was it shipped through US postal service or by a third party carrier like FedEx or UPS? There are really exorbitant courier fees (payable by the receiver) when the item is shipped UPS or FEDEX. The sender should always use US postal service for mailing prizes to Canada.
It was shipped via US Postal and I picked it up at my local Canada Post outlet... What I had to pay was HST on the value of the item... no addictional charges.
ChrysN vanweb1 year ago
I've never been charged taxes from Canada Post or a courier from prizes that I won. I guess just HST isn't so bad, but I guess if it is a big prize like a Mac book it could add up. (Good job winning a Mac book).
Kiteman fred271 year ago
VAT is charged as a percentage of the sale price. For a prize item, that would be based on the RRP.

Duty is charged as a percentage of the value of the item, as decided by the officer dealing with the case.
fred27 (author) 1 year ago
Digging up a very old thread as my prize took over 3 months to arrive, but I can answer my own question. I did have to pay 20% VAT on the value of my prize. It was listed as $1000 on the packaging so ended up paying £142 (20% VAT, no import duty, £8 fees) before delivery.

Looking into the Customs rules the only thing you can avoid paying on is a gift from one individual to another of less than £40. If you get away with anything more than that then you've been lucky.
lemonie1 year ago
This can & does apply to overseas purchases, I think the site's disclaimer is to cover themselves in case it should apply to prizes. I don't think it does but-
HM Revenue & Customs, Imports and purchases from abroad: paying and reclaiming VAT

L
I was told by HMRC directly that both VAT and import duty are payable on prizes won outside the UK and then mailed to the UK.

On some of the larger prizes, this could amount to hundreds, possibly thousands of pounds.

However, I acted as the address for a Europe-based winner who had won an iPad. Officially, this should have attracted a duty bill of around £80, but, even though the item was properly labelled and declared as part of the mailing process, no charge was ever made by HMRC.

Ooh, you know that it's your responsibility to pay duty & taxes, you don't get off because HMRC didn't ask you. However, I doubt that they will.
There's usually some paperwork with consignment I think.

L
iPad? What iPad? I don't got no iPad, officer!

fred27 (author) 1 year ago
Thanks for your comments everyone. It sounds like I'll probably be paying VAT, which is what I expected. I hope that using my work address for shipping won't complicate things!
BrittLiv1 year ago
I've won a Kitchen Aid and they bought it in the UK, so I didn't have to pay taxes. In Germany they don't care if it's a present, or if you've bought it. You always have to pay taxes based on the market value.
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