Class 1: Vouchers - non-cash vouchers - calculation of the amount of earnings - the chargeable expense - examples
NIM02461 explains how to calculate the amount of earnings included in any payment made by way of a non-cash voucher (NIM02413). Such arrangements now apply to a variety of situations where an employee gives up a right to future cash remuneration in return for a payment in kind, the following examples illustrate that calculation. However, when a non-cash voucher is provided as part of an optional remuneration arrangement (OpRA), how the voucher is valued can differ, see EIM44000.
An employer buys a batch of non-cash vouchers exchangeable at a High Street store. Each voucher has a face value of £50.
Because the employer bought in bulk, it negotiated a discount on the price. So the cost of each voucher to it ie, the chargeable expense, is £35 a voucher.
This is the amount to be included in the employee’s earnings for each voucher they receive.
Using the last example, the employee is required to pay their employer 50% of the chargeable expense for each non-cash voucher they receive.
So the chargeable expense of each voucher provided to the employee is reduced by £17.50. So the amount of earnings is £17.50 for each voucher provided to the employee.