Bonus Paid in Vouchers, not Cash

credit_crunch

Hi
Hopefully someone can help & I hope this is in the right place.
When we reach targets each month, we are given a bonus. This is taxed & included on our payslips.

One of my colleagues has said that if our employer was to pay us in vouchers - eg tesco or sainsburys, then we would not be taxed on this.

Does any one know if this is correct? Or would I would find out? We have looked on HMRC website but the wording made it difficult for me to understand.

I am in Northern Ireland - not sure it makes any difference.

Thanks in advance

le_loup

No, it's not correct. Payment or payment in kind are equally taxable ... otherwise everyone would want to be paid with some sort of voucher.
Don't listen to people in pubs ... even if they are colleagues!

credit_crunch

thanks le loup.
She was actually told by a manager in quite a large company, and apparently that is how they pay their employees their bonus - meal or shopping vouchers.

Our employer was concerned that we would end up with a tax bill after a matter of months, so turns out he was right after all!

Thanks again

pjclar02

credit_crunch wrote: »

thanks le loup.
She was actually told by a manager in quite a large company, and apparently that is how they pay their employees their bonus - meal or shopping vouchers.

Our employer was concerned that we would end up with a tax bill after a matter of months, so turns out he was right after all!

Thanks again

What the manager in the large company possibly does not see is that the large company may have a PAYE Settlement Agreement (PSA) in place which covers the vouchers given to staff. This means that the employer settles the tax liability on behalf of the employee - which is a fairly common practice.

Either way, it is taxable - either the employee pays the tax or the employer bears it on their behalf.

WestonDave

Prior to repeal in 2011 you used to be able to have Luncheon Vouchers at the rate of 15p per day tax free which some employers used to give tax free vouchers. However that got scrapped as a tax simplification measure - the 15p per day dated back to 1948 when that would buy an employee without access to a workplace canteen a meal elsewhere instead.


However now they are all taxable!

00ec25

it is cut and dried -

if the voucher is capable of being exchanged for cash ("a cash voucher") then it is a taxable benefit
A benefit arises where a cash voucher is provided for an employee or a member of his or her family (see EIM16080) by reason of the employment
http://www.hmrc.gov.uk/manuals/eimanual/eim16110.htm

if the voucher is capable of being exchanged for goods to the value of the voucher ("a non cash voucher") then it is a taxable benefit
A benefit arises where a non-cash voucher is provided for an employee or a member of his or her family (see EIM16080) by reason of the employment.
http://www.hmrc.gov.uk/manuals/eimanual/eim16040.htm

jamesml

As said, suspect manager of large company who are referring to doesn't know that a PSA is in place. Very common when vouchers are given - its tough to tell an employee that they need to pay more cash tax because they've received a voucher, which clearly isn't cash, without taking home anything extra in your pay packet.