Part 3Employment income: earnings and benefits etc. treated as earnings
Chapter 4Taxable benefits: vouchers and credit-tokens
Cash vouchers: introduction
73Cash vouchers to which this Chapter applies
1
This Chapter applies to a cash voucher provided for an employee by reason of the employment which is received by the employee.
2
A cash voucher provided for an employee by the employer is to be regarded as provided by reason of the employment unless—
a
the employer is an individual, and
b
the provision is made in the normal course of the employer’s domestic, family or personal relationships.
3
A cash voucher provided for an employee and appropriated to the employee—
a
by attaching it to a card held for the employee, or
b
in any other way,
is to be treated for the purposes of this Chapter as having been received by the employee at the time when it is appropriated.
74Provision for, or receipt by, member of employee’s family
For the purposes of this Chapter any reference to a cash voucher being provided for or received by an employee includes a reference to it being provided for or received by a member of the employee’s family.
Meaning of “cash voucher”
75Meaning of “cash voucher”
1
In this Chapter “cash voucher” means a voucher, stamp or similar document capable of being exchanged for a sum of money which is—
a
greater than,
b
equal to, or
c
not substantially less than,
the expense incurred by the person at whose cost the voucher, stamp or similar document is provided.
2
For the purposes of subsection (1) it does not matter whether the document—
a
is also capable of being exchanged for goods or services;
b
is capable of being exchanged singly or together with other vouchers, stamps, or documents;
c
is capable of being exchanged immediately or only after a time.
3
Subsection (1) is subject to section 76 (sickness benefits-related voucher).
76Sickness benefits-related voucher
1
This section applies where—
a
the expense incurred by the person at whose cost a voucher, stamp or similar document is provided (“the provision expense”) includes costs to that person of providing sickness benefits (“sickness benefits costs”),
b
the voucher, stamp or document would be a cash voucher (apart from this section) but for the fact that the sum of money for which it is capable of being exchanged (“the exchange sum”) is substantially less than the provision expense, and
c
the whole or part of the difference between the exchange sum and the provision expense represents the sickness benefits costs.
2
The voucher, stamp or document is a cash voucher within the meaning of this Chapter if—
or
where—
E is the exchange sum,
PE is the provision expense, and
D is the amount of the difference between E and PE which represents the sickness benefits costs.
3
In this section “sickness benefits” mean benefits in connection with sickness, personal injury or death.
77Apportionment of cost of provision of voucher
If a person incurs expense in or in connection with the provision of vouchers, stamps or similar documents for two or more employees as members of a group or class, the expense incurred in respect of one of them is to be such part of that expense as is just and reasonable.
Cash vouchers: exceptions
78Voucher made available to public generally
This Chapter does not apply to a cash voucher if—
a
it is of a kind made available to the public generally, and
b
it is provided to the employee or a member of the employee’s family on no more favourable terms than to the public generally.
79Voucher issued under approved scheme
1
This Chapter does not apply to a cash voucher received by an employee if—
a
it is issued under a scheme, and
b
at the time when it is received the scheme is a scheme approved by F12an officer of Revenue and Customs for the purposes of this section.
2
F12An officer of Revenue and Customs must not approve a scheme for the purposes of this section unless F25the officerF1is satisfied that it is practicable for income tax in respect of all payments made in exchange for vouchers issued under the scheme to be deducted in accordance with PAYE regulations.
80Vouchers where payment of sums exempt from tax
This Chapter does not apply to a cash voucher if it is—
a
a document intended to enable a person to obtain payment of a sum which would not have constituted employment income if paid to the person directly, or
b
a savings certificate where the accumulated interest payable in respect of it is exempt from tax (or would be so exempt if certain conditions were met).
Benefit of cash voucher treated as earnings
81Benefit of cash voucher treated as earnings
1
The cash equivalent of the benefit of a cash voucher to which this Chapter applies is to be treated as earnings from the employment for the tax year in which the voucher is received by the employee.
F131A
Where a cash voucher to which this Chapter applies is provided pursuant to optional remuneration arrangements—
a
subsection (1) does not apply, and
b
the relevant amount is to be treated as earnings from the employment for the tax year in which the voucher is received by the employee.
1B
In this section “the relevant amount” means—
a
the cash equivalent, or
b
if greater, the amount foregone with respect to the benefit of the voucher (see section 69B).
2
The cash equivalent is the sum of money for which the voucher is capable of being exchanged.
F83
For the purposes of subsection (1B), assume that the cash equivalent is zero if the condition in subsection (4) is met.
4
The condition is that the benefit of the voucher would be exempt from income tax but for section 228A (exclusion of certain exemptions).
Non-cash vouchers: introduction
82Non-cash vouchers to which this Chapter applies
1
This Chapter applies to a non-cash voucher provided for an employee by reason of the employment which is received by the employee.
2
A non-cash voucher provided for an employee by the employer is to be regarded as provided by reason of the employment unless—
a
the employer is an individual, and
b
the provision is made in the normal course of the employer’s domestic, family or personal relationships.
3
A non-cash voucher provided for an employee and appropriated to the employee—
a
by attaching it to a card held for the employee, or
b
in any other way,
is to be treated for the purposes of this Chapter as having been received by the employee at the time when it is appropriated.
83Provision for, or receipt by, member of employee’s family
For the purposes of this Chapter any reference to a non-cash voucher being provided for or received by an employee includes a reference to it being provided for or received by a member of the employee’s family.
Meaning of “non-cash voucher”
84Meaning of “non-cash voucher”
1
In this Chapter “non-cash voucher” means—
a
a voucher, stamp or similar document or token which is capable of being exchanged for money, goods or services,
F5ab
a childcare voucher,
b
a transport voucher, or
c
a cheque voucher,
but does not include a cash voucher.
2
For the purposes of subsection (1)(a) it does not matter whether the document or token is capable of being exchanged—
a
singly or together with other vouchers, stamps, documents or tokens;
b
immediately or only after a time.
F142A
In this Chapter “childcare voucher” means a voucher, stamp or similar document or token intended to enable a person to obtain the provision of care for a child (whether or not in exchange for it).
3
In this Chapter “transport voucher” means a ticket, pass or other document or token intended to enable a person to obtain passenger transport services (whether or not in exchange for it).
4
In this Chapter “cheque voucher” means a cheque—
a
provided for an employee, and
b
intended for use by the employee wholly or mainly for payment for—
i
particular goods or services, or
ii
goods or services of one or more particular classes;
and, in relation to a cheque voucher, references to a voucher being exchanged for goods or services are to be read accordingly.
Non-cash voucher: exceptions
85Non-cash voucher made available to public generally
This Chapter does not apply to a non-cash voucher if—
a
it is of a kind made available to the public generally, and
b
it is provided to the employee or a member of the employee’s family on no more favourable terms than to the public generally.
86Transport vouchers under pre-26th March 1982 arrangements
1
This Chapter does not apply to a transport voucher provided for an employee of a passenger transport undertaking under arrangements in operation on 25th March 1982 which meet the condition in subsection (2).
2
The condition is that the arrangements are intended to enable the employee or a member of the employee’s family to obtain passenger transport services provided by—
a
the employer,
b
a subsidiary of the employer,
c
a body corporate of which the employer is a subsidiary, or
d
another passenger transport undertaking.
3
In this section—
Benefit of non-cash voucher treated as earnings
87Benefit of non-cash voucher treated as earnings
1
The cash equivalent of the benefit of a non-cash voucher to which this Chapter applies is to be treated as earnings from the employment for the tax year in which the voucher is received by the employee.
2
The cash equivalent is the difference between—
a
the cost of provision, and
b
any part of that cost made good by the employee F11, to the person incurring it, on or before 6 July following the relevant tax year.
F92A
If the voucher is a non-cash voucher other than a cheque voucher, the relevant tax year is—
a
the tax year in which the cost of provision is incurred, or
b
if later, the tax year in which the employee receives the voucher.
2B
If the voucher is a cheque voucher, the relevant tax year is the tax year in which the voucher is handed over in exchange for money, goods or services.
3
In this Chapter the “cost of provision” means, in relation to a non-cash voucher, the expense incurred in or in connection with the provision of—
a
the voucher, and
b
the money, goods or services for which it is capable of being exchanged,
by the person at whose cost they are provided.
F33A
In the case of a childcare voucher, the reference in subsection (3)(b) to the services for which the voucher is capable of being exchanged is to the provision of care for a child which may be obtained by using it.
4
In the case of a transport voucher, the reference in subsection (3)(b) to the services for which the voucher is capable of being exchanged is to the passenger transport services which may be obtained by using it.
5
If a person incurs expense in or in connection with the provision of non-cash vouchers for two or more employees as members of a group or class, the expense incurred in respect of one of them is to be such part of that expense as is just and reasonable.
F76
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87AF16Benefit of non-cash voucher treated as earnings: optional remuneration arrangements
1
Where a non-cash voucher to which this Chapter applies is provided pursuant to optional remuneration arrangements—
a
the relevant amount is to be treated as earnings from the employment for the tax year in which the voucher is received by the employee, and
b
section 87(1) does not apply.
2
To find the relevant amount, first determine which (if any) is the greater of—
a
the cost of provision (see section 87(3)), and
b
the amount foregone with respect to the benefit of the voucher (see section 69B).
3
If the cost of provision is greater than or equal to the amount foregone, the “relevant amount” is the cash equivalent of the benefit of the non-cash voucher (see section 87(2)).
4
Otherwise, the “relevant amount” is the difference between—
a
the amount foregone, and
b
any part of the cost of provision that is made good by the employee, to the person incurring it, on or before 6 July following the relevant tax year.
5
If the voucher is a non-cash voucher other than a cheque voucher, the relevant tax year is—
a
the tax year in which the cost of provision is incurred, or
b
if later, the tax year in which the employee receives the voucher.
6
If the voucher is a cheque voucher, the relevant tax year is the tax year in which the voucher is handed over in exchange for money, goods or services.
7
For the purposes of subsections (2) and (3), assume that the cost of provision is zero if the condition in subsection (8) is met.
8
The condition is that the non-cash voucher would be exempt from income tax but for section 228A (exclusion of certain exemptions).
88Year in which earnings treated as received
1
In the case of a non-cash voucher other than a cheque voucher, the amount treated as earnings under section 87 F22or 87A is to be treated as received—
a
in the tax year in which the cost of provision is incurred, or
b
if later, in the tax year in which the voucher is received by the employee.
2
In the case of a cheque voucher, the amount treated as earnings under section 87 F2or 87A is to be treated as received in the tax year in which the voucher is handed over in exchange for money, goods or services.
3
F6For the purposes of subsection (2) and sections 87(2B) and 87A(6), Where a cheque voucher is posted it is to be treated as handed over at the time of posting.
F1889Reduction for meal vouchers
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Credit-tokens: introduction
90Credit-tokens to which this Chapter applies
1
This Chapter applies to a credit-token provided for an employee by reason of the employment which is used by the employee to obtain money, goods or services.
2
A credit-token provided for an employee by the employer is to be regarded as provided by reason of the employment unless—
a
the employer is an individual, and
b
the provision is made in the normal course of the employer’s domestic, family or personal relationships.
91Provision for, or use by, member of employee’s family
For the purposes of this Chapter—
a
any reference to a credit-token being provided for an employee includes a reference to it being provided for a member of the employee’s family, and
b
use of a credit-token by a member of an employee’s family is to be treated as use of the token by the employee.
Meaning of “credit-token”
92Meaning of “credit-token”
1
In this Chapter “credit-token” means a credit card, debit card or other card, a token, a document or other object given to a person by another person (“X”) who undertakes—
a
on the production of it, to supply money, goods or services on credit, or
b
if a third party (“Y”) supplies money, goods or services on its production, to pay Y for what is supplied.
2
A card, token, document or other object can be a credit-token even if—
a
some other action is required in addition to its production in order for the money, goods or services to be supplied;
b
X in paying Y may take a discount or commission.
3
For the purposes of this section—
a
the use of an object given by X to operate a machine provided by X is to be treated as its production to X, and
b
the use of an object given by X to operate a machine provided by Y is to be treated as its production to Y.
4
A “credit-token” does not include a cash voucher or a non-cash voucher.
Credit-tokens: exception
93Credit-token made available to public generally
This Chapter does not apply to a credit-token if—
a
it is of a kind made available to the public generally, and
b
it is provided to the employee or a member of the employee’s family on no more favourable terms than to the public generally.
Benefit of credit-token treated as earnings
94Benefit of credit-token treated as earnings
1
On each occasion on which a credit-token to which this Chapter applies is used by the employee in a tax year to obtain money, goods or services, the cash equivalent of the benefit of the token is to be treated as earnings from the employment for that year.
2
The cash equivalent is the difference between—
a
the cost of provision, and
b
any part of that cost made good by the F20employee—
i
to the person incurring it, and
ii
on or before 6 July following the tax year which contains the occasion in question.
3
In this section the “cost of provision” means the expense incurred—
a
in or in connection with the provision of the money, goods or services obtained on the occasion in question, and
b
by the person at whose cost they are provided.
4
If a person incurs expense in or in connection with the provision of credit-tokens for two or more employees as members of a group or class, the expense incurred in respect of one of them is to be such part of that expense as is just and reasonable.
94AF4Benefit of credit-token treated as earnings: optional remuneration arrangements
1
If the conditions in subsections (2) and (3) are met in relation to any occasions on which a credit-token to which this Chapter applies is used by the employee in a tax year to obtain money, goods or services—
a
the relevant amount is to be treated as earnings from the employment for that year, and
b
section 94(1) does not apply in relation to the use of the credit-token on those occasions.
2
The condition in this subsection is that the credit-token is used pursuant to optional remuneration arrangements.
3
The condition in this subsection is that AF is greater than the relevant cost of provision for the tax year.
In this section “AF” means so much of the amount foregone (see section 69B) as is attributable on a just and reasonable basis to the use of the credit-token by the employee in the tax year pursuant to the optional remuneration arrangements to obtain money, goods or services.
4
The “relevant amount” is the difference between—
a
AF, and
b
any part of the relevant cost of provision for the tax year that is made good by the employee, to the person incurring it, on or before 6 July following the tax year which contains the occasion of use of the credit-token to which the making good relates.
5
But the relevant amount is taken to be zero if the amount given by paragraph (b) of subsection (4) exceeds AF.
6
For the purposes of this section the “relevant cost of provision for the tax year” is determined as follows—
Step 1 Find the cost of provision with respect to each occasion of use of the credit-token by the employee in the tax year pursuant to the optional remuneration arrangements to obtain money, goods or services.
Step 2 The total of those amounts is the relevant cost of provision for the tax year.
7
But the relevant cost of provision for the tax year is to be taken to be zero if the condition in subsection (8) is met.
8
The condition is that use of the credit token by the employee in the tax year pursuant to the optional remuneration arrangements to obtain money, goods or services would be exempt from income tax but for section 228A (exclusion of certain exemptions).
9
In this section “cost of provision” has the same meaning as in section 94.
General supplementary provisions
95Disregard for money, goods or services obtained
1
This section applies if the cash equivalent of the benefit of a cash voucher, a non-cash voucher or a credit-token F10or the relevant amount in respect of a cash voucher, a non-cash voucher or a credit-token —
a
is to be treated as earnings from an employee’s employment under this Chapter, F15...
F15b
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
Money, goods or services obtained—
a
by the employee or another person in exchange for the cash voucher or non-cash voucher, or
b
by the employee or a member of the employee’s family by use of the credit-token,
are to be disregarded for the purposes of the Income Tax Acts.
3
But the goods or services are not to be disregarded for the purposes of applying sections 362 and 363 (deductions where non-cash voucher or credit-token provided).
F173A
In the case of a childcare voucher, the reference in subsection (2)(a) to the services obtained in exchange for the voucher is to the provision of care for a child obtained by using it.
4
In the case of a transport voucher, the reference in subsection (2)(a) to the services obtained in exchange for the voucher is to the passenger transport services obtained by using it.
F1996Dispensations relating to vouchers or credit-tokens
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96AF24Power to exempt use of non-cash vouchers or credit-tokens to obtain exempt benefits
1
The Treasury may by regulations provide for exemption from any liability that would otherwise arise by virtue of this Chapter in respect of—
a
non-cash vouchers which are or can be used to obtain specified exempt benefits, or which evidence an employee's entitlement to specified exempt benefits;
b
credit-tokens which are used to obtain specified exempt benefits.
2
In this section—
“exempt benefit” means a benefit the direct provision of which is exempted from liability to income tax by a provision of Part 4 (employment income: exemptions), and
“specified” means specified in the regulations.
3
Regulations under this section may operate by amending section 266 (exemption of non-cash vouchers for exempt benefits) or section 267 (exemption of credit-tokens used for exempt benefits).