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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Vouchers and credit-tokens: dispensations

Section 96 ITEPA 2003

For a description of the points to consider in a case involving a voucher or a credit- token see EIM16030.

A dispensation confirming that no additional tax is payable under Part 3 Chapter 4 ITEPA 2003 may be granted where:

  • an employee is provided with a non-cash voucher exchangeable for goods and services, cash vouchers such as traveller’s cheques, or a credit-token and
  • the voucher or credit-token can be used only to meet an expense that would be wholly admissible as a deduction from the employee’s remuneration.

For 2015/16 and earlier this applies whether or not the employee is in lower-paid employment.

Examples are where:

  • an employee is provided with a voucher or traveller’s cheques solely to cover the cost of hotel accommodation on a business trip, or
  • a lorry driver is provided with a credit card that can only be used for buying diesel fuel for the lorry he or she is driving.

If a voucher or credit card can be used to meet any private expenses (including expenses that are partly business and partly private) no dispensation can be given unless there are arrangements whereby the employee makes good the whole of the private expenditure.

For 2015/16 and earlier, the fact that a dispensation is given under the rules relating to vouchers or credit-tokens does not, strictly, prevent the relevant expenses from being assessable upon employees who are not in lower-paid employment and directors. In practice such a dispensation may normally be regarded as effective also for employees who are not in lower-paid employment and directors. If there is any doubt whether the employee will have earnings at a rate of £8,500 a year or more, the employer will, however, need to keep record of the expenses covered by the dispensation.

For the rules to be used in deciding whether to issue a dispensation and the wording of a dispensation, see EIM30051 onwards.