BN 31 - VDU Users: Eye Tests And Glasses

Who is likely to be affected?

1. Employees and employers who obtain or provide eyetests and corrective spectacles for Visual Display Unit (VDU) use.

General description of the measure

2. Employers are required by law to provide, or meet the cost of, eyecare tests and/or corrective glasses for VDU use for their employees. HMRC would not normally expect a tax charge on the benefit in kind. However, this would not be the case if eyetests and/or glasses were provided by means of a voucher.

3. The purpose of this measure is to ensure that there is no tax charge however an employer pays for an eye test and/or corrective glasses, whether direct to the provider, by reimbursing the cost to the employee or by providing a voucher.

4. It also provides a regulation-making power that will allow HMRC to exempt similar benefits in kind from a tax charge when provided by vouchers.

Operative date

5. Will have effect from 6 April 2006.

Current law and proposed revisions

6. Chapter 4 of Part 3 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA) covers the tax treatment of vouchers and credit tokens. Sections 82-89 cover non-cash vouchers and Section 82 provides the circumstances when non-cash vouchers are taxable.

7. Sections 95 and 96 contain general supplementary provisions relating to the tax treatment of vouchers and credit tokens. Additional regulationmaking powers will be added to section 96 to exempt from a tax charge vouchers used to provide a benefit by an employer that would otherwise be exempt from a tax charge.

8. Section 266 lists the benefits in kind exempt from a tax charge when a non-cash voucher is used to provide it. Eyetests and glasses for VDU users will be added to the list at subsection (3) of section 266 ITEPA thus removing a tax charge where an employer pays for their provision by means of a voucher.

9. Chapter 11 of Part 4 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA) lists miscellaneous employer-provided benefits that are exempt from an Income Tax charge. A new section will be added as section 320A that will exempt from tax the provision of eye tests and special corrective glasses.

Further advice

10. If you have any questions about this change, please contact your local HMRC office (see the Telephone Directory for details), or call the Employer helpline on 0845 7143 143.