Income Tax (Earnings and Pensions) Act 2003 section 695

Credit-tokens

Section 695 sets out how employers must operate PAYE when an employee uses a credit-token that has been provided because of their employment.

• Each time an employee uses a credit-token to obtain money or a readily convertible asset, the employer must treat this as a payment of PAYE income equal to the benefit amount calculated under the credit-token earnings rules
• Where the credit-token is provided under optional remuneration arrangements (such as salary sacrifice), the PAYE amount is calculated as though the token had been provided outside those arrangements
• Credit-tokens used to obtain money to meet expenses are excluded from these rules if the money, had it been paid directly by the employer, would not have been PAYE income
• PAYE regulations may provide further exclusions for other types of credit-token use, and tokens covered by a dispensation are also outside the scope of these rules