HMRC internal manual

Employment Income Manual

EIM21618 - Particular benefits: air miles, credit card points etc

In general, air miles, petrol tokens, credit card points etc. acquired by an employee are not taxable if they were acquired in the same way as applies to any other member of the general public, for instance by buying goods or services on which such benefits are given,

Provided the vouchers, air miles or points belong to the employee rather than the employer, they are not considered as being provided by reason of their employment even if the goods or services giving rise to them happen to be purchased as part of the employee’s business travel or using a credit card provided by the employer.

Using the example of air miles, the benefit of the award of additional air miles will not be considered to be provided by reason of the employment even if the employee concerned only has the opportunity to be awarded those particular air miles because they’re going on a business journey for which the costs are met or reimbursed by the employer. But this is subject to the condition that the air miles are awarded to the employee from the outset in just the same way that the provider would award them to any other customer buying the same ticket or product.

In those circumstances, there is no need for the employer - or indeed the third party supplier of the air miles or reward/ profile points - to report these items to HMRC, or for the employee in question to enter them on a tax return if he or she gets one,

However, there is a tax charge on such items, if they are provided by reason of the employee’s employment.

This would be the case if the fact of the employment was a necessary antecedent condition to the receipt of air miles. An example of this would be where the employer purchased a block of air miles and distributed them to the employees, perhaps as part of an incentive scheme. Another example would be where there’s an arrangement for a third party to provide petrol tokens or some other form of award points specifically to employees of a particular employer but not to other customers.

It is important to remember that the exact tax treatment will depend on the facts of a particular case.