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HMRC internal manual

Employment Income Manual

Tax treatment of insurance agents: cashbacks received by employees

A cashback is defined in the Statement of Practice SP4/97 (see EIM64605) as a lump sum received by a customer as an inducement to enter into a transaction for the purchase of goods, investments or services, which is received as a direct consequence of entering that transaction.

The statement includes material on the taxation of cashbacks received by employees from employers or third parties. A cashback received by an employee, which is also available on like terms to the general public, will not give rise to a tax charge unless it is a sum paid gratuitously by an employer to its employee. In that case liability under the benefits rules must be considered.