NIM02462 - Class 1: Vouchers - non-cash vouchers - calculation of the amount of earnings - the chargeable expense - examples

NIM02461 explains how to calculate the amount of earnings included in any payment made by way of a non-cash voucher (see NIM02413). The following examples illustrate that calculation.

Example 1

An employer buys a batch of non-cash vouchers exchangeable at a High Street store. Each voucher has a face value of £50.

Because the employer bought in bulk, it negotiated a discount on the price. So the cost of each voucher to it ie, the chargeable expense, is £35 a voucher.

This is the amount to be included in the employee’s earnings for each voucher they receive.

Example 2

Using the last example, the employee is required to pay their employer 50% of the chargeable expense for each non-cash voucher they receive.

So the chargeable expense of each voucher provided to the employee is reduced by £17.50. So the amount of earnings is £17.50 for each voucher provided to the employee.

Where the non-cash voucher is a meal voucher that can be exchanged only for a meal costing more than 15 pence, see NIM02463.