Income Tax (Earnings and Pensions) Act 2003 section 87

Benefit of non-cash voucher treated as earnings

Section 87 explains how the benefit an employee receives from a non-cash voucher is converted into a taxable earnings figure, how the "cash equivalent" is calculated, and which tax year the charge falls into.

• The cash equivalent of a non-cash voucher is treated as taxable earnings in the tax year the employee receives it
• The cash equivalent is the total cost of providing the voucher and what it can be exchanged for, minus any amount the employee reimburses by 6 July after the relevant tax year
• For non-cheque vouchers the relevant tax year is the later of when the cost is incurred or the voucher is received; for cheque vouchers it is the year the voucher is exchanged for money, goods or services
• Where vouchers are provided to a group of employees, the cost must be apportioned on a just and reasonable basis to each individual employee