87ABenefit 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).