Income Tax (Earnings and Pensions) Act 2003 section 694

Non-cash vouchers

Section 694 requires employers to operate PAYE on certain non-cash vouchers provided to employees, treating the voucher as a notional payment of employment income.

• When an employee receives a non-cash voucher that can be exchanged for a readily convertible asset, or that would itself qualify as a readily convertible asset, the employer must operate PAYE on it
• The amount subject to PAYE is the value of the voucher as calculated under sections 87(2) or 87A(4), which treat the benefit of a non-cash voucher as earnings
• For most non-cash vouchers, the PAYE payment date is the later of when the cost of providing the voucher is incurred or when the employee receives it; for cheque vouchers, it is when the voucher is handed over (or posted) in exchange for money, goods or services
• A voucher appropriated to an employee — for example by loading it onto a card held for that employee — is treated as received at the time of appropriation, even if the employee has not physically taken possession of it