By Tolley in association with Philip Rutherford

The following Employment Tax guidance note by Tolley in association with Philip Rutherford provides comprehensive and up to date tax information covering:

  • Vouchers
  • Introduction
  • Cash vouchers
  • Non-cash vouchers and credit-tokens
  • Specific voucher types
  • Credit-tokens
  • Reporting requirements
  • Salary sacrifice arrangements


This guidance note covers the treatment of vouchers, whether in the form of a cash voucher or non-cash voucher. In addition, many employers also offer employees credit-tokens to pay for expenses or credit cards to allow employees to meet expenses.

Cash vouchers

If an employer provides an employee with a cash voucher then the full value for which the voucher can be exchanged counts as earnings for tax purposes.

That amount should be included in the employee’s earnings and included in payroll at the time that the employee receives the voucher (even if the voucher cannot actually be used until a later date). Income tax and Class 1 NIC should be deducted from the full amount under PAYE.

In order for a voucher to qualify as a cash voucher, it should fall within ITEPA 2003, s 75. A ‘cash voucher’ is defined as a voucher stamp or document capable of being exchanged for a sum of money that is not substantially less than the expenses incurred on it by the provider. A useful rule of thumb is that if a voucher can only be exchanged for a cash amount that is substantially less than its face value, it is likely to be a non-cash voucher rather than a cash voucher.

See Example 1.

What constitutes ‘substantially less’ is a subjective test. Therefore, care should be taken when deciding whether or not a voucher is a cash voucher.

Cash vouchers are covered by HMRC guidance at EIM16110.

Non-cash vouchers and credit-tokens

If a non-cash voucher is provided to an employee or a family member by reason of his employment then, unless an exception is available, tax and NIC are chargeable and reporting consequences arise. The legislation is in ITEPA 2003, s 82 onwards.

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