Produced by Tolley in association with Paul Tew

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

  • Vouchers
  • Introduction
  • Cash vouchers
  • Non-cash vouchers and credit-tokens
  • What is a non-cash voucher?
  • When is the benefit taxable?
  • What is the amount of the benefit?
  • Statutory exemptions
  • Specific voucher types
  • Transport vouchers
  • More...



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. If an employer provides a voucher (eg a high street store voucher) to an employee, it is taxable. For example, the employer may give vouchers to their staff as a Christmas ‘bonus’. It is important to identify which category the voucher falls into so that the cash equivalent can be correctly determined.

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 income tax purposes. The cash equivalent is the amount received in exchange for the voucher, together with any costs to the employer in providing the voucher. For more details on the cash equivalent chargeable to tax, see Proforma 1 ― cash equivalent of cash vouchers.

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 similar document capable of being exchanged for a sum of money that is greater than, equal to or not substantially less than the expenses incurred on it by the person who is 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.

The rules for cash vouchers still apply even if the voucher can be

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