Tax on side earnings paid in vouchers?

silvercar

I understand that side earnings eg income from market research/ surveys etc has a £1,000 trading allowance. I was of the understanding that any reward paid in (shopping) vouchers where there is no option to have a cash alternative, didn’t count towards the limit, as per

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim100150.

on another thread, this one https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim40051 suggests that the shopping vouchers would be ‘money’s worth’ and therefore do count as income.

can anyone clarify please.

Jeremy535897

BIM 100150 deals with "miscellaneous income," and there is no mechanism to charge non-cash vouchers that have no cash alternative.
BIM 40051 deals with "trading income," where there are provisions for including vouchers with no cash alternative as profits from a trade.
I doubt that completing surveys, a passive activity that doesn't have many of the so-called "badges of trade," is a trade:
https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim20205

silvercar

Jeremy535897 said:

BIM 100150 deals with "miscellaneous income," and there is no mechanism to charge non-cash vouchers that have no cash alternative.
BIM 40051 deals with "trading income," where there are provisions for including vouchers with no cash alternative as profits from a trade.
I doubt that completing surveys, a passive activity that doesn't have many of the so-called "badges of trade," is a trade:
https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim20205

Your latter point is interesting in itself. The first 2 are covered off the list - profit seeking and many of them. If not a trade, then what? The MSE article suggests it comes within the trading allowance.

mybestattempt

Vouchers are moneysworth and HMRC guidance clearly indicates the concept of moneysworth applies to miscellaneous income and that the profit should be computed in same way as trading profit.

(Of course, I accept HMRC guidance is their interpretation of the legislation and that moneysworth is only codified as trading income at S28A ITTAOI 2005)

However, HMRC would, it appears, take the same line on vouchers as taxable income whether trading or miscellaneous income.

Also it's worth pointing out the £1000 allowance applies to both trading and miscellaneous income.

Jeremy535897

mybestattempt said:

Vouchers are moneysworth and HMRC guidance clearly indicates the concept of moneysworth applies to miscellaneous income and that the profit should be computed in same way as trading profit.

(Of course, I accept HMRC guidance is their interpretation of the legislation and that moneysworth is only codified as trading income at S28A ITTAOI 2005)

However, HMRC would, it appears, take the same line on vouchers as taxable income whether trading or miscellaneous income.

Also it's worth pointing out the £1000 allowance applies to both trading and miscellaneous income.

BIM 100150 makes it clear that if there is no cash alternative to the non-cash payment, there is nothing to tax as miscellaneous income. Section 28A ITTOIA 2005 applies only to trading income. I don't think passively responding to surveys or other questionnaires is trading. You don't buy anything or modify anything. There is no risk. You incur no costs. You don't actively seek business. Just because you get paid for doing them and do lots of them doesn't make it a trade.

mybestattempt

Jeremy535897 said:

mybestattempt said:

Vouchers are moneysworth and HMRC guidance clearly indicates the concept of moneysworth applies to miscellaneous income and that the profit should be computed in same way as trading profit.

(Of course, I accept HMRC guidance is their interpretation of the legislation and that moneysworth is only codified as trading income at S28A ITTAOI 2005)

However, HMRC would, it appears, take the same line on vouchers as taxable income whether trading or miscellaneous income.

Also it's worth pointing out the £1000 allowance applies to both trading and miscellaneous income.

BIM 100150 makes it clear that if there is no cash alternative to the non-cash payment, there is nothing to tax as miscellaneous income. Section 28A ITTOIA 2005 applies only to trading income. I don't think passively responding to surveys or other questionnaires is trading. You don't buy anything or modify anything. There is no risk. You incur no costs. You don't actively seek business. Just because you get paid for doing them and do lots of them doesn't make it a trade.

I'm afraid I disagree with your reading of BIM 100150, it clearly states under the heading Non Cash Receipts that, as with trading income the sweep up miscellaneous income provisions charge money and moneysworth.

What the example does is demonstrate that a non transferable holiday, on it's own, is not moneysworth. It cannot be passed on to realise value.

Obviously a cash alternative is simply money and is taxable.

If the alternative was £1000 worth of vouchers, that's moneysworth, the vouchers have value which can be realised, £1000 is taxable

If the reward for writing the newspaper article was just £3000 worth of vouchers, £3000 is taxable.

I've already mentioned S28A ITTAIO relates only to trading income.

However, the principle of moneysworth applies in the Capital Gains regime: 

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg14500

Also, the position on non cash/store vouchers as taxable income has long been codified in ITEPA 2003.

So far as whether doing surveys for reward is trading, like all "is it trading?" situations, it depends on the relevant facts in any particular case.

All that said, my view is that whether it's trading or miscellaneous income, vouchers are taxable receipts and the £1000 trading and miscellaneous allowance applies. The taxable income is the same amount.

Jeremy535897

If you are right, what does this mean in BIM 100150?
"A non-transferable holiday provided, with no cash alternative, as payment for a ‘story’ by a newspaper is not taxable as miscellaneous income as it cannot be converted into money."

sheramber

You can't buy anything paying with a holiday.

mybestattempt

It's means, as I have said, that the non transferable holiday on it's own is not moneysworth. It can't be sold for money or spent like money.

If there is an alternative which is money or moneysworth (worth measured in money) then that amount is chargeable.

Jeremy535897

mybestattempt said:

It's means, as I have said, that the non transferable holiday on it's own is not moneysworth. It can't be sold for money or spent like money.

If there is an alternative which is money or moneysworth (worth measured in money) then that amount is chargeable.

I agree, but if the voucher cannot be exchanged for anything other than goods in a shop, and is non transferable, I do not believe it is taxable as miscellaneous income.

mybestattempt

But what is a voucher other than moneysworth?

A £20 voucher has worth measured in money of £20 and can be spent like cash.

If a person buys goods (or services) which cost £50 and pays £30 with cash (or card) and the balance with the £20 voucher it's worth has been realised and transferred. 

I'm not sure how a voucher could ever be non transferable, by its very nature it's transferable in the same way as payment by cash or card.