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HMRC internal manual

Employment Income Manual

From
HM Revenue & Customs
Updated
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PAYE: special type of income: credit tokens

Part 11 Chapter 4 ITEPA 2003Part 3 Chapter 4 ITEPA 2003 sets out the amount charged to tax on the benefit of certain cash vouchers, non-cash vouchers and credit-tokens that are provided by reason of an employee’s employment (see

EIM16010 onwards).

For cash and non-cash vouchers the amount charged to tax is treated as earnings of the year of assessment in which the voucher is received. For credit-tokens the amount charged to tax is treated as earnings of the year of assessment in which the credit-token is used.
### PAYE on credit-tokens – Section 695 ITEPA 2003On each occasion that an employee uses a credit-token provided because of the employee’s employment to obtain either:

  • money, or
  • anything that , if it was provided to the employee at the time the credit-token is used, would be regarded as a readily convertible asset (see EIM11855)the employer is treated as making a payment of PAYE income to the employee. The employer is required to operate PAYE on an amount equal to the amount charged to tax as earnings. Broadly, the amount charged to tax as earnings is the difference between the cost of provision of whatever is obtained and any part of that cost made good by the employee to the person incurring that cost.

ExceptionsThe employer is not required to operate PAYE on the use of a credit-token by an employee to obtain money if the money obtained:

  • is used to meet allowable expenses and
  • if the money had been paid directly to the employee by the employer, the amount would not have been PAYE income.