EIM16150 - Vouchers and credit-tokens: expenses incurred in providing a voucher or credit token
Statement of Practice 6/1985
For a description of the measure of the liability under the
vouchers and credit-token legislation see
EIM16140.
Sometimes goods and services that the employer sells in the
course of its business are provided free to the employee, through a
voucher. In such a case the points made in Pepper v Hart (65TC421)
apply just as much as if no voucher was involved. For the measure
of the expense in such a case see
EIM21110 onwards.
Statement of Practice SP6/85 outlines the expenses that
should be included in the calculation of any liability under the
voucher legislation. This applies whether or not the goods and
services obtainable with the voucher are ones the employer sells in
the course of its business. The expenses that should be included in
the cash equivalent of the benefit are those that contribute more
or less directly to the benefit received by the employee. Some
expenses may be associated with the voucher, etc but do not add to
its value from the employee's point of view, for example, the cost
to the employer of devising and planning an incentive scheme.
Statement of Practice SP6/85 sets out the costs that should
be included or excluded from any valuation as follows:
"A. Expenses included in the computation of emoluments:
- cost of buying the goods or providing services
- cost of selecting and testing those goods or services
- cost of storing, distributing and installing the goods or, if appropriate, services
- cost of servicing and other after sales expenses
- where a third party is used to distribute the awards or to run an incentive campaign, his fees for handling the functions above.
B. Expenses excluded from the computation of emoluments:
- cost of management time in considering whether or not to launch a scheme
- cost of researching, devising and planning such a scheme
- cost of preparing and printing promotional material
- cost of administration (including the costs of meeting the Inland Revenue's requirements) except for the functions covered in A above
- where a third party is involved, as in A above, his or her fees for handling functions within B."
