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We are looking to draw in more customers to our store by offering incentive to existing customers to email friends about our website.

What we want to have is a page with a form on it where they can enter their email address and say 5 emails of their friends and then press a submit button. After that I would like to check that their email is registered on the site and either generate a £5 voucher to be sent to them, or just apply a £5 credit to their account.

Can either of those two options be setup in Magento by default or would an extension need to be used to achieve this?

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You would need an extension. This functionality typically goes by the name of "refer a friend". Quite a few of these exist for Magento, depending on what you need you might be able to use an existing one or adapt it.

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