Income and Corporation Taxes Act 1988

142 Credit-tokens. U.K.

(1) M1 Subject to the provisions of this section and section 157(3), where a credit-token is provided for an employee by reason of his employment, then, for the purposes of the Income Tax Acts—

(a) on each occasion on which the employee uses the credit-token to obtain money, goods or services he shall be treated as having received an emolument from his employment of an amount equal to [F1 the expense incurred—

(i) by the person at whose cost the money, goods or services are provided,

(ii) in or in connection with that provision;] and

(b) any money, goods or services obtained by the employee by use of the credit-token shall be disregarded.

(2) M2 There shall be deductible under section 198, 201, [F2 201AA] or 332(3) from the amount taxable under subsection (1) above such amounts, if any, as would have been so deductible if the cost of the goods or services in question had been incurred by the employee out of his emoluments.

(3) M3 The expense incurred by the person [F3 mentioned in subsection (1)(a)(i) above] shall be treated as reduced by any part of that expense made good to that person by the employee.

[F4 (3A) Subsection (1) above shall not apply in relation to a credit-token to the extent that it is used by the employee to obtain the use of a car parking space at or near his place of work.]

[F5 (3B) Subsection (1) above shall not apply in relation to any credit-token to the extent that it is used to obtain entertainment (including hospitality of any kind) for the employee or a relation of his, if—

(a) the person [F6 mentioned in subsection (1)(a)(i) above] is neither his employer nor a person connected with his employer;

(b) neither his employer nor a person connected with his employer has directly or indirectly procured the provision of the entertainment; and

(c) the entertainment is not provided either in recognition of particular services which have been performed by him in the course of his employment or in anticipation of particular services which are to be so performed by him;

and section 839 shall apply for determining whether persons are connected for the purposes of this subsection.]

[F7 (3C) Subsection (1) above shall not apply in relation to a credit-token to the extent that it is used by the employee to obtain goods, services or money where—

(a) obtaining the goods or services is incidental to his being away from his usual place of abode during a qualifying absence from home or, as the case may be, the money is obtained for the purpose of being used to obtain goods or services which would be so incidental;

(b) the authorised maximum is not exceeded in relation to that qualifying absence; and

(c) the cost of obtaining the goods or services would not be deductible as mentioned in subsection (2) above if incurred by the employee out of his emoluments.

(3D) Subsections (3) to (5) of section 200A shall apply as they apply for the purposes of that section for construing the references in subsection (3C) above to a qualifying absence from home and for determining, for the purposes of that subsection, whether the authorised maximum is exceeded.]

(4) M4 In this section “credit-token” means a card, token, document or other thing given to a person by another person who undertakes—

(a) that on the production of it (whether or not some other action is also required) he will supply money, goods and services (or any of them) on credit; or

(b) that where, on the production of it to a third party (whether or not some other action is also required) the third party supplies money, goods and services (or any of them), he will pay the third party for them (whether or not taking any discount or commission);

but does not include a non-cash voucher or a cash voucher.

(5) M5 For the purposes of subsection (4) above, the use of an object to operate a machine provided by the person giving the object, or by a third party, shall be treated as production of the object to that person or, as the case may be, third party.

Textual Amendments

F1 Words in s. 142(1)(a) substituted (3.5.1994) by Finance Act 1994 (c. 9), s. 89(5)

F2 Words in s. 142(2) inserted (with effect in accordance with s. 91(3) of the amending Act) by Finance Act 1995 (c. 4), s. 91(2)

F3 Words in s. 142(3) substituted (3.5.1994) by Finance Act 1994 (c. 9), s. 89(6)

F4 1988(F) s.46(2)for 1988-89and subsequent years.

F5 1988(F) s.48(1)for 1988-89and subsequent years. For 1987-88see 1988(F) s.48.

F6 Words in s. 142(3B)(a) substituted (3.5.1994) by Finance Act 1994 (c. 9), s. 89(7)

F7 S. 142(3C)(3D) inserted (with effect in accordance with s. 93(5) of the amending Act) by Finance Act 1995 (c. 4), s. 93(2)

Modifications etc. (not altering text)

C1 See S.I. 1973 No.334, regn.31 (da) (in Part III Vol.5)—returns by employers.

C2 S. 142(3A) extended (with effect in accordance with s. 49(4) of the extending Act) by Finance Act 1999 (c. 16), s. 49(1)(2)

Marginal Citations

M1 Source—1975 (No.2) s.36A(1)(b), (c); 1981 s.71(1); 1982 s.45(2)

M2 Source—1975 (No.2) s.36A(2); 1981 s.71(1)

M3 Source—1975 (No.2) s.36A(3); 1981 s.71(1); 1982 s.45(2)

M4 Source—1975 (No.2) s.36A(4), (4B); 1981 s.71(1); 1982 s.45(3)

M5 Source—1975 (No.2) s.36A(4A); 1981 s.71(1); 1982 s.45(3)