This guide explains your tax and National Insurance contributions (NICs) obligations if you provide an employee with vouchers. The rules differ depending on whether or not the vouchers can be exchanged for cash.
The rules in this area are complex. To go direct to detailed information, choose the link below to ‘Technical guidance’.
On this page:
You provide an employee with vouchers that can be exchanged for cash. These are often referred to as cash vouchers. It doesn’t matter whether or not the vouchers can also be exchanged for goods and services.
The vouchers count as earnings, so:
The value to use is the amount of cash for which the employee can exchange the vouchers.
You provide an employee with vouchers that can only be exchanged for good or services – not for cash. These are often referred to as non-cash vouchers.
For employees earning at a rate of less than £8,500 per year, unless you provide one of the vouchers referred to in the ‘Exceptions’ section below:
For company directors or employees earning at a rate of £8,500 or more per year, unless you provide one of the vouchers referred to in the ‘Exceptions’ section below:
The value to use is the cost to you of providing the vouchers.
If the non-cash vouchers you provide are for childcare services please see the next section.
There are a number of non-cash vouchers on which no Class 1 NICs are due. Follow the link below to find out when this applies. If you provide an employee with one of these:
NIM02416: Non-cash vouchers - exemptions
The rules that apply to childcare vouchers are explained in the A to Z entry on ‘Childcare’. Follow the link below.
It’s important to choose correctly between forms P11D and P9D for each employee. The form to use depends on the whether the employee is a director of your company and on whether their earnings are above or below an annual rate of £8,500. For more information – including details of what’s included in the £8,500 threshold - follow the link below.
EIM16000: Vouchers and credit-tokens
