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HMRC internal manual

Tax Credits Technical Manual

Income: Employment income rules: The cash equivalent of any non-cash voucher received by the claimant chargeable to income tax under section 87 of ITEPA 2003

The Tax Credits (Definition and Calculation of Income) Regulations 2002, Reg. 4(1)(c)

These are vouchers, which can be exchanged for money, goods or services.

The general rule is that income must include an amount equal to the additional expense incurred by the employer or third party specifically for the purpose of providing:

  • The voucher itself, and
  • The money, goods or services for which the voucher can be exchanged, less
  • Any part of the expense made good to the provider by the employee.

The full rules can be found via the first three rows in the table in the Employment Income Manual EIM16140


Note: With effect from 6 April 2017 the way in which many salary sacrifice and benefit in kind schemes are taxed will change, which means that some tax credit claimants will see an increase in their taxable income.

For the purposes of tax credits, where one of these schemes is in operation the taxable income figure should be used.