Chapter 6: Exemptions: Non-cash vouchers and credit-tokens
Overview
1084.This Chapter provides exemptions which apply to non-cash vouchers and credit-tokens. Anything provided by way of a non-cash voucher or credit-token which is not in the exemptions provided by this Chapter remains chargeable, even if it would be exempt where provided direct. Bringing these exemptions together is a change in approach.
1085.The derivations of the exemptions in this Chapter are those given for the exemptions applying to equivalent direct provision.
1086.The different wording used in each section and subsection in this Chapter reflects the different ways in which vouchers and credit-tokens may be used and the circumstances in which the exemption will apply.
Section 266: Exemption of non-cash vouchers for exempt benefits
1087.Subsection (1) derives from sections 141(6A), and (6B) and 197A of ICTA, section 49(1) of FA 1999, and ESCs A59 and A66. All these exemptions apply to non-cash vouchers to the extent that they are used to obtain the exempt item. The inclusion of the exemptions provided by the ESCs is a minor change to the law. See Changes 48 and 49 in Annex 1.
1088.Subsection (2) derives from sections 197AA, 197AB(5) and 197AC(5) of ICTA. In each of these provisions the voucher is not handed over, but is used as evidence of entitlement.
1089.Subsection (3) derives from sections 197(2) and 197G(1) of ICTA and ESCs A58, A70B and A74. For each of these the voucher is used only for the exempt purpose. The inclusion of the exemptions provided by the ESCs is a minor change to the law. See Changes 47, 56 and 58 in Annex 1.
1090.Subsection (4) provides the voucher exemption in respect of something exempted by use of the regulations in respect of minor benefits.
1091.Subsection (5) ensures that exemptions under this section apply even if the employee is in lower-paid employment. Unlike other benefits charges, chargeability for non-cash vouchers and credit-tokens applies to all employees.
Section 267: Exemption of credit-tokens used for exempt benefits
1092.This section derives from section 142(3A) and (3B) of ICTA, section 49(1) and (2) of FA 1999, and ESCs A58, A59, A66 and A74. The inclusion of the exemptions provided by the ESCs is a minor change to the law. See Changes 47, 48 and 49 in Annex 1.
Section 268: Exemption of vouchers and tokens for incidental overnight expenses
1093.This section exempts from charge by virtue of Chapter 4 of Part 3 both non-cash vouchers and credit-tokens used to meet “incidental overnight expenses”. It derives mainly from sections 141(6C) and 142(3C) of ICTA.
1094.Subsection (1) sets out the terms of the exemption where the voucher or token is used to obtain goods, services or money.
1095.Subsections (2) to (5) set out the conditions to be satisfied.
1096.Subsection (6) provides definitions of terms used in the section by cross-reference to the exemption in sections 240 (incidental overnight expenses and benefits) and 241 (incidental overnight expenses and benefits: overall exemption limit) for equivalent direct provision.
Section 269: Exemption where benefits or money obtained in connection with taxable car or van or exempt heavy goods vehicle
1097.This section exempts from charge by virtue of Chapter 4 of Part 3 both non-cash vouchers and credit-tokens used for expenditure on taxable cars or vans, or on exempt heavy goods vehicles.
1098.Subsection (1) sets out the exemption. It derives from sections 157(3)(b), 159AA(3)(b) and 159AC(3)(b) of ICTA.
1099.Subsection (2) qualifies the exemption by reference to the provisions of section 149 (benefit of car fuel treated as earnings) where what is obtained is fuel for a car.
1100.Subsections (3) and (4) provide definitions of terms used in the section and make clear the tax year for which the car, van or heavy goods vehicle is taxable or exempt. See Note 33 in Annex 2.
1101.The definition of how a heavy goods vehicle is “exempt” for the purposes of this section ensures that the exemption applies where the employee is in lower-paid employment. This is a minor change to the law. See Change 43 in Annex 1.
Section 270: Exemption for small gifts of vouchers and tokens from third parties
1102.This section provides there is no liability to tax by virtue of Chapter 4 of Part 3, in respect of small gifts from third parties which take the form of a non-cash voucher or credit-token, where conditions are satisfied. It derives from ESC A70A and is a minor change to the law. See Change 59 in Annex 1.
1103.Subsection (1) sets out the terms of the exemption where the conditions are satisfied.
1104.Subsections (2) to (4) set out the conditions, in part by cross-reference to the provisions of section 324 (small gifts from third parties).
