Gift vouchers are a hot topic in the beauty world right now, and just like booking fees, I see a lot of “make-it-up-as-you-go” behaviour that can land you in hot water. Here's the thing: until a voucher is redeemed, it’s essentially free money sitting in your business. But if you’re giving people only three months to use it and refusing to budge when they can’t, you’re asking for trouble. That’s not just bad for business; it’s bad for your reputation.

Gift vouchers are amazing—they’re a great way to bring in extra revenue and attract new clients. But, as with anything involving money, you need to play by the rules. Here’s everything you need to know to avoid drama and stay on the right side of the law.

Why Gift Vouchers Are Great

1. Extra Revenue: You get paid upfront, which is always a win.

1. New Clients: They’re an easy way to bring in potential new clients who wouldn’t normally book.

1. Build Loyalty: Happy customers often buy vouchers for their friends and family, spreading the word about your business.

Expiry Dates

Reasonable Timeframe: Most businesses offer at least 12 months. Anything shorter can feel unfair and leave customers annoyed. Some salons now extend validity to stand out.

Be Transparent: Clearly state the expiry date when the voucher is purchased, and display it on the voucher itself.

Key Law: Under the Consumer Protection from Unfair Trading Regulations 2008, unclear or misleading expiry dates can be considered unfair trading.

Refunds and Consumer Rights

• Non-Refundable: Vouchers are typically non-refundable unless there’s a fault or misleading practice involved.
• 14-Day Cooling-Off Period: If the voucher was bought online, by phone, or mail order, the buyer has 14 days to cancel and get a refund under the Consumer Contracts Regulations.

Partial Redemptions

If a client doesn’t use the full value of their voucher, the remaining balance should stay available unless stated otherwise.

You’re not legally required to refund small leftover balances, but make this clear upfront.

Lost or Stolen Vouchers

You can choose whether to replace lost or stolen vouchers, but be upfront about your policy. If they’re non-replaceable, say so clearly at the time of purchase.

VAT (Value Added Tax)

Single-Purpose Vouchers: If the voucher is for a specific service, VAT is charged when it’s sold.

Multi-Purpose Vouchers: VAT is only charged when the voucher is redeemed.

Key Law: VAT rules for vouchers are outlined in the Value Added Tax Act 1994.

Insolvency

If your business goes under, voucher holders might lose out. While this is unfortunate, it’s a risk all businesses and customers take. Be clear about your policies, and avoid overselling vouchers if your financial situation is uncertain.

Misrepresentation

Under the Consumer Rights Act 2015, your terms and conditions must be accurate and clear. No hidden fees or vague expiry dates. Misleading practices can lead to complaints or even legal action.

The 5-Year Rule Explained

You’ve probably heard about the “5-year rule,” but what does it actually mean? Spoiler alert: it doesn’t mean vouchers need to last 5 years. It’s all about contract law and how long a customer has to challenge unfair terms.

• In Scotland: Customers can bring a claim within 5 years.
• In England, Wales, and Northern Ireland: They have 6 years to make a claim.
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This rule might come into play if:

1. The expiry date was unreasonably short (e.g., 3 months) and wasn’t clearly communicated.
2. The terms weren’t properly explained at the time of purchase.

Set Fair Expiry Dates: Offer at least 12 months. If possible, give a little grace period to keep clients happy.

Be Transparent: Make sure terms like expiry dates and refund policies are clear on the voucher and when it’s purchased.

Offer Flexibility: Even if a voucher expires, honoring it for a few months after can save you from disputes and bad reviews.

Communicate Clearly: Let clients know the rules at every step, from purchase to redemption.

​​​​​​​Track Vouchers: Use a system to manage sales and redemptions so nothing falls through the cracks.

Example Situation

Let’s say a client buys a £50 voucher for a facial valid for 6 months. They forget to use it, and it expires. If they feel the time limit wasn’t reasonable or the terms weren’t explained properly, they could challenge this up to 5 (or 6) years later. To avoid this, always offer clear, reasonable terms.

Gift vouchers are a fantastic tool for boosting revenue and bringing in new clients, but they come with responsibilities. By keeping your terms fair, transparent, and client-focused, you’ll build trust and avoid disputes. And if you’re ever unsure, a quick chat with a legal advisor or Trading Standards can help you get everything in order.

Keep it simple, keep it fair, and your gift voucher system will run smoothly while keeping clients happy!