Section 87A — Income Tax (Earnings and Pensions) Act 2003: Benefit of non-cash voucher treated as earnings: optional remuneration arrangements

Benefit of non-cash voucher treated as earnings: optional remuneration arrangements 87A 1 Where a non-cash voucher to which this Chapter applies is provided pursuant to optional remuneration arrangements—

a the relevant amount is to be treated as earnings from the employment for the tax year in which the voucher is received by the employee, and b section 87(1) does not apply.

2 To find the relevant amount, first determine which (if any) is the greater of—

a the cost of provision (see section 87(3)),

and b the amount foregone with respect to the benefit of the voucher (see section 69B).

3 If the cost of provision is greater than or equal to the amount foregone, the “relevant amount” is the cash equivalent of the benefit of the non-cash voucher (see section 87(2)).

4 Otherwise, the “relevant amount” is the difference between—

a the amount foregone, and b any part of the cost of provision that is made good by the employee, to the person incurring it, on or before 6 July following the relevant tax year.

5 If the voucher is a non-cash voucher other than a cheque voucher, the relevant tax year is—

a the tax year in which the cost of provision is incurred, or b if later, the tax year in which the employee receives the voucher.

6 If the voucher is a cheque voucher, the relevant tax year is the tax year in which the voucher is handed over in exchange for money, goods or services.

7 For the purposes of subsections (2) and (3), assume that the cost of provision is zero if the condition in subsection (8) is met.

8 The condition is that the non-cash voucher would be exempt from income tax but for section 228A (exclusion of certain exemptions).