A parliamentary question and Treasury response have clarified that paid entries in UK prize draws are not exempt from VAT and will be taxed at the standard 20% rate. The voluntary code of conduct for prize draw operators, aimed at improving consumer protection, will take full effect on 20 May 2026. The sector is valued at £1.3 billion annually.
On 17 February 2026, HMRC confirmed that paid entries in prize draws are subject to the standard 20% VAT rate.
The code takes full effect on 20 May 2026, requiring signatories to implement it by that date.
The market is estimated at £1.3 billion annually.
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