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Income Tax (Earnings and Pensions) Act 2003

Section 694: Non-cash vouchers

2813.This section provides for PAYE to be operated on certain non-cash vouchers. It derives from section 203G of ICTA and from regulations.

2814.Subsection (1) provides that, if the conditions of this section are met, then the provision of a non-cash voucher will constitute a payment of PAYE income of an amount equal to the amount treated as earnings under section 87(1).

2815.Subsection (2) states when the section applies to a non-cash voucher. This is when either of the conditions in subsections (3) and (4) are met and the voucher is not excluded by PAYE regulations.

2816.But there is no requirement to operate PAYE on non-cash vouchers which are subject to a dispensation (see section 96) as Chapter 4 of Part 3 then does not apply to the voucher.

2817.Subsection (3) provides for a non-cash voucher to fall within this section, and therefore within PAYE, if it is exchangeable for a readily convertible asset.

2818.Subsection (4) provides that a non-cash voucher falls within this section if it would itself be regarded as a readily convertible asset for the purposes of section 696 but for the fact that section 696 does not apply to non-cash vouchers (because they are dealt with by this section).

2819.Subsections (5) and (6) derive from regulation 6(1) to (3) and 2(1) of the Income Tax (Employments) (Notional Payments) Regulations 1994 (SI 1994 No 1212). They determine when a payment is made and what “cheque voucher” and “cost of provision” mean.

2820.Subsection (7) is the same rule about appropriation of vouchers as in section 82(3).

2821.“Readily convertible asset” is defined in section 702. “Non-cash voucher” is defined in section 721.

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