Why voucher money is not simply income
A voucher sale brings cash in before you have done anything for it. The customer, or the person they gave it to, can come back later and expect the value they paid for. Until they do, you owe them that value in goods or services. That amount is often called the outstanding voucher liability.
This matters for day-to-day decisions. A strong December of voucher sales can look like a strong December of trade, but much of the work arrives in January, February and beyond. If the cash has already been spent, the quieter months carry the cost of honouring those vouchers.
How voucher sales and unused value appear in your accounts is a question for your accountant. This guide does not give accounting advice. It explains the terms and the records your accountant is likely to ask for.
The five-year rule keeps vouchers open longer
Under the Consumer Protection (Gift Vouchers) Act 2019, a voucher sold on or after 2 December 2019 must generally have no expiry date or stay valid for at least five years. Customers can also use the balance across several visits. So a voucher sold this Christmas may be partly used next spring and finished years later. Your records need to follow each voucher for that long. The voucher expiry guide sets out the rules.
A short expiry date is not a way to reduce the liability. Where the Act applies, an expiry shorter than five years is not allowed.
What breakage means
Some vouchers are never used, or not in full. The value left when a voucher expires is often called breakage. It is tempting to count on it, but you cannot know in advance which vouchers will go unused, and a no-expiry voucher may never reach that point. Treat unused value as owed until the voucher has actually expired, and ask your accountant how to handle it after that.
The VAT side
VAT timing depends on the type of voucher. Revenue's guidance says VAT on a single-purpose voucher is due when it is sold, and no adjustment is made if it is never used. VAT on a multi-purpose voucher is due when it is redeemed, and if it is never redeemed, no VAT is due. That makes an accurate redemption record important. The VAT guide explains the two types. Agree which applies to your vouchers with your accountant.
What to track
Whatever system you use, keep these figures for every voucher:
- The code, the product and the date it was sold.
- The amount paid and the value issued.
- Every redemption, with its date and amount.
- The current balance.
- The expiry date, or a note that there is none.
- Any refund, reversal or correction, with a reason.
Add those balances together and you have your outstanding liability. Review it at least monthly, and before any decision about spending voucher cash.
How Bronora records it
Bronora keeps a record of each voucher sale and each redemption, including partial use and reversals. The Reports page in the merchant workspace shows gross sales, refunds, Bronora fees, Stripe fees, issued value and outstanding liability in one place, and you can export the summary and your orders as CSV files for your accountant. The dashboard also shows outstanding liability alongside the number of active vouchers.
Bronora does not decide how any of this is treated in your accounts or your VAT returns. It gives you the figures; your accountant decides what to do with them.
If you still have paper vouchers in circulation, their balances are part of your liability too. Bringing them into the same system avoids two sets of figures. See the guide to importing existing vouchers, and the comparison of digital and paper vouchers.
A simple monthly routine
You do not need a finance team to keep this under control. Once a month, take ten minutes to:
- Note the outstanding liability figure and compare it with last month.
- Check how much was sold and how much was redeemed in the month.
- Look for vouchers with an expiry date coming up in the next few months.
- Export the figures and file them where your accountant can find them.
If the outstanding figure keeps rising while redemptions stay low, that is not a problem in itself, but it does mean more work is waiting for you. Make sure the cash is there to cover it. If you want customers to come back and use their vouchers, a friendly reminder email or a note in your newsletter is usually enough.
Busy seasons and bulk orders
The liability grows fastest after the Christmas season and after corporate orders, where one employer may buy vouchers for a whole team at once. Plan staffing and stock for the months when those vouchers come back. The Christmas guide covers preparing for January redemptions. Hotels and spas with high-value experience vouchers should watch this figure closely; see the pages for hotels and spas.
Questions to take to your accountant
- How should voucher sales appear in our accounts before they are used?
- When, if ever, can unused value be treated as income?
- Are our vouchers single-purpose or multi-purpose for VAT?
- What report do you want from us, and how often?