How is Tax Treated on Sale of Gift Certificate in UK

Gift Certificates do no include VAT as it is treated like cash.
 
Face value vouchers

Face value vouchers have a monetary face value. These are used instead of money for a future purchase. If you sell them at or below their monetary value, no VAT is due.

When a customer redeems a face value voucher, the transaction is treated as though the face value voucher was cash, and VAT is due on the full value of the transaction. If you can show the voucher had been sold at a discounted amount, VAT is due on the discounted value, rather than the face value of the voucher.

If you give away face value vouchers and redeem them for no further payment, the goods purchased are usually treated as if they were free gifts for VAT purposes.

Tax is charged when consumer redeems the voucher in the shop.

Money-off coupons

Money-off coupons, vouchers or similar, offer customers a discount off a future purchase. If you give them free at the time of a purchase, no VAT is due, but if you sell them for a discount, VAT is due on the price charged.

When your customers redeem money-off coupons, VAT is due only on the additional amount, if any, that the customers pay you.

You can refer to HMRC's links  http://www.hmrc.gov.uk/vat/managing/charging/discounts-etc.htm  and http://www.hmrc.gov.uk/vat/managing/charging/charging.htm