Non-cash vouchers

16/09/2003, by Mark McLaughlin CTA (Fellow) ATT TEP, Tax Articles - PAYE and Payroll Taxes, National Insurance, NICs

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TaxationWeb by Peter Arrowsmith, FCA

A useful NI 'tip' concerning non-cash vouchers, described by Peter Arrowsmith, FCAIt should be remembered that, from 6 April 1999, non-cash vouchers are subject to Class 1 National Insurance contributions (although not PAYE), i.e. they are to be accounted for through the payroll at the same time as cash payments.

The definition, based on the tax legislation, is extremely wide and catches - for example:

- Air/holiday tickets
- Some car park/football, etc. season and other tickets
- Cheque for rail season ticket made payable to the rail company
- Theatre tickets, Wimbledon and the like

Inevitably many employers will not have recognised such transactions as non-cash vouchers and Inland Revenue guidance has been poor. Only in 2003, four years after the introduction of the legislation, has the Revenue's National Insurance Manual been updated to reflect these rules. Just in time for employer compliance officers to read the new contents and use them before the six years is up! Don't let your clients hear it from the Revenue first - forewarn them if they are affected.

For future transactions, employers can usually use a PAYE Settlement Agreement if they wish (which will also entail them bearing the employees tax liability, which otherwise would get coded out after the P11D is completed, or collected under self-assessment).

It should be noted that different rules apply where a third party (e.g. a supplier) gives the vouchers.

About The Author

Mark McLaughlin is a Fellow of the Chartered Institute of Taxation, a Fellow of the Association of Taxation Technicians, and a member of the Society of Trust and Estate Practitioners. From January 1998 until December 2018, Mark was a consultant in his own tax practice, Mark McLaughlin Associates, which provided tax consultancy and support services to professional firms throughout the UK.

He is a member of the Chartered Institute of Taxation’s Capital Gains Tax & Investment Income and Succession Taxes Sub-Committees.

Mark is editor and a co-author of HMRC Investigations Handbook (Bloomsbury Professional).

Mark is Chief Contributor to McLaughlin’s Tax Case Review, a monthly journal published by Tax Insider.

Mark is the Editor of the Core Tax Annuals (Bloomsbury Professional), and is a co-author of the ‘Inheritance Tax’ Annuals (Bloomsbury Professional).

Mark is Editor and a co-author of ‘Tax Planning’ (Bloomsbury Professional).

He is a co-author of ‘Ray & McLaughlin’s Practical IHT Planning’ (Bloomsbury Professional)

Mark is a Consultant Editor with Bloomsbury Professional, and co-author of ‘Incorporating and Disincorporating a Business’.

Mark has also written numerous articles for professional publications, including ‘Taxation’, ‘Tax Adviser’, ‘Tolley’s Practical Tax Newsletter’ and ‘Tax Journal’.

Mark is a Director of Tax Insider, and Editor of Tax Insider, Property Tax Insider and Business Tax Insider, which are monthly publications aimed at providing tax tips and tax saving ideas for taxpayers and professional advisers. He is also Editor of Tax Insider Professional, a monthly publication for professional practitioners.

Mark is also a tax lecturer, and has featured in online tax lectures for Tolley Seminars Online.

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