SE11910 - PAYE avoidance: PAYE on vouchers and credit tokens

Section 203G, H and I ICTA 1988

Vouchers and credit tokens – income tax treatment

Sections 141-143 ICTA 1988 provide the income tax treatment when an employee obtains goods or services by means of a voucher or credit token provided by reason of the employment (see SE16010 onwards).

The Schedule E charge arises when the voucher is received – if the voucher is appropriated to the employee the date of appropriation should be treated as the date on which it is received. The charge on credit tokens arises when the token is used.

PAYE on non-cash vouchers – S203G

When an employee receives a non-cash voucher by reason of the employment, or a non-cash voucher is appropriated to the employee, and the voucher

• is a readily convertible asset; or
• can be exchanged for goods or services which are readily convertible assets
• the employer is required to operate PAYE on an amount equal to the expense incurred by the person at whose cost the voucher is provided.
• For example, PAYE is due on a voucher for 100 gold bars because the gold bars are a readily convertible asset (see SE11804) but PAYE is not generally due on a store gift voucher because it is not a readily convertible asset.

PAYE on credit tokens - Section 203H

When an employee uses a credit token (such as a credit card), provided by reason of the employment, to obtain money or readily convertible assets, the employer is required to operate PAYE on an amount equal to the expense incurred by the person at whose cost the credit token is provided.

PAYE on cash vouchers – Section 203I

When an employee receives a cash voucher by reason of the employment, or a cash voucher is appropriated to the employee, the employer is required to operate PAYE on an amount equal to the sum of money for which the voucher may be exchanged.

Cash vouchers (and money obtained in exchange for such vouchers) used to defray allowable expenses are outside the scope of PAYE – see EP1191.