HMRC’s Employment Income Manual is clear that there are special rules when an employee receives goods or services by reason of their employment, that the employee does not pay for in full. The first step should always be to consider whether a voucher or credit-token was used to obtain them.
Any non-cash vouchers, for example gift vouchers or credit tokens from shops, or electronic cards (equivalent to vouchers) given to a director or employee that can only be exchanged for goods or services may be chargeable as benefits.
The chargeable amount is generally the cost to the employer of providing the voucher or card less any amount made good by the director or employee. Non-cash vouchers also include items such as book tokens or tickets, that cannot be exchanged for cash.
The value of the vouchers and credit tokens should be added to the director’s or employee’s gross pay and Class 1 NICs operated unless a specific exemption applies.
The underlying legislation in Part 3 Chapter 4 ITEPA 2003:
- covers all employees (including for 2015/16 and earlier, those in lower paid employment)
- applies to vouchers and credit-tokens provided by third parties as well as those provided by employers
- charges a benefit in respect of vouchers or credit-tokens provided for, or received by, a relation of the employee.