Non-cash earnings ― overview

Produced by Tolley
  • (Updated for Autumn Budget 2021)

The following Employment Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Non-cash earnings ― overview
  • Types of non-cash earnings with a different treatment
  • Tax
  • Exemptions
  • Benefits that are ‘money’s worth’
  • The benefits code
  • By reason of the employment
  • Effect of COVID-19 on the benefits code
  • Benefits provided by third parties
  • National insurance
  • More...

Non-cash earnings ― overview

In addition to wages and salaries, many reward packages include other items such as the provision of a car, health insurance or childcare. The employer may also choose to pay certain bills on behalf of the employee, eg in respect of a home landline or utility bills. These are often referred to as benefits-in-kind, BIKs or simply ‘benefits’.

Types of non-cash earnings with a different treatment

As with any other kind of employment reward, if the non-cash earnings are provided through a third party rather than the employer, it is worth considering whether the ‘Disguised remuneration’ provisions in ITEPA 2003, ss 554A–554Z21 (Pt 7A) apply, as those rules have priority over most of the other rules for taxing employment income. See the Disguised remuneration ― overview guidance note. If there is no third party, or one of the exemptions from ITEPA 2003, ss 554A–554Z21 (Pt 7A) applies, then the normal rules as described below, apply.

One form of non-cash reward that employers can offer to employees is shares or share options. The tax treatment of shares and share options is covered in the guidance notes on share schemes (see the Comparison of share schemes guidance note as a starting point).

Employers may also make contributions to pension schemes on behalf of their employees. The guidance notes on pension schemes set out the employment tax position for that element of a pay package. See the Pension scheme types guidance note as a starting point.

This note focuses on other forms of non-cash

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