Payrolling non-cash vouchers and credit tokens

10 August 2016

HMRC has published draft regulations - The Income Tax (Pay As You Earn) (Amendment No. X) Regulations 2016 and a draft explanatory memorandum for a technical consultation.

Geographical extent - This regulatory change applies to all four nations of the UK.

The draft regulations make changes to the Income Tax (Pay As You Earn) Regulations 2003. These changes allow employers to voluntarily payroll the benefit of non-cash vouchers and credit tokens provided to employees from 6 April 2017.

Nothing in these draft regulations affects the obligation set out in section 694 and section 695 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA) to operate Pay As You Earn (PAYE) on non-cash vouchers or credit tokens which are regarded as, or are exchangeable for, readily convertible assets.

The power to make the amendments to the PAYE regulations is set out in Clause 15 of the Finance Bill 2016 and is currently going through the parliamentary process. The draft regulations are drawn up on the basis that the power will receive Royal Assent in its current form. The consultation is conducted in anticipation of the powers being formally made.

Comments on the drafts should be sent by email to employmentincome.policy@hmrc.gsi.gov.uk by 3 October 2016.