Gift vouchers for employees

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I have a client that is wanting to sort out some vouchers for his employees, approx £500 to £750 per employee, which my client is advising me that this is a tax free payment.

I have reviewed the finance bill which states the following;

87A Benefit of non-cash voucher treated as earnings: optional remuneration arrangements
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).

Base on the above, I have concluded that the gift of vouchers, regardless of the value, is to be treated as a taxable benefit, and therefore should be taxed.

Any experience any similar scenarios

Many thanks

Replies (18)

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By andy.partridge
08th Nov 2017 11:27

You say 'regardless of value', but have you looked at guidance on trivial benefits? Your client might be able to structure something that meets their objectives.

https://www.gov.uk/expenses-and-benefits-trivial-benefits

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Replying to andy.partridge:
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By Mr_awol
08th Nov 2017 11:37

Quote:

You say 'regardless of value', but have you looked at guidance on trivial benefits? Your client might be able to structure something that meets their objectives.

https://www.gov.uk/expenses-and-benefits-trivial-benefits

Maybe if they structure it completely differently, since not only do they want to exceed the value of a 'trivial' benefit but they also want to give a voucher (cash and cash vouchers obviously not being eligible for exemption as a trivial benefit of course).

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Replying to Mr_awol:
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By andy.partridge
08th Nov 2017 14:45

Maybe if they structure it completely differently, since not only do they want to exceed the value of a 'trivial' benefit but they also want to give a voucher (cash and cash vouchers obviously not being eligible for exemption as a trivial benefit of course).

[/quote]

1. I haven't seen the detail of the benefit so it may or may not be eligible. If it isn't it wouldn't be beyond the wit of the OP to suggest an alternative that meets the conditions.
2. Not sure why you think the OP's client's objective necessarily exceeds the value of a trivial benefit.

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Replying to andy.partridge:
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By Mr_awol
09th Nov 2017 17:04

Spreading restrictive vouchers over an extended period isnt 'restructuring', it is completely different.

There is no way for the OP's client to dish out the value of vouchers they want to without severely watering down the intention. They would be better off doing something entirely different.

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Replying to Mr_awol:
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By Portia Nina Levin
09th Nov 2017 17:22

Why should we make any assumptions about what the client's intentions are?

Normal policy when advising clients is to give them options. They can reject those otions if they wish, but at least they have options!

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By Mr_awol
08th Nov 2017 11:32

In my mind this is all part of a fantastic client meeting:

They told you they wanted to give some vouchers, you told them they'd be taxable, they told you it wouldn't be taxable, so you checked the legislation but didn't really understand it so you came up with the bright idea of putting an anonymous post on Aweb (incomplete in detail of course so we don't know if this is a voucher scheme or bonus, or what) asking for someone else to work it out for you.

Meanwhile, in my mind's eye, you and your client are huddled round your monitor eagerly awaiting the answer.

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Replying to Mr_awol:
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By HandC
08th Nov 2017 15:36

I understand your frustration, however, as this is a forum, surely you enrolled to either seek/provide additional support from/to OP's, rather than the route of denigrating users for not having the wealth of knowledge displayed by yourself.

In any event, the trivial benefits scheme isn't applicable, as the OP's client is wanting to provide vouchers of £500-£750 to each employee, which far exceeds the trivial benefit value, and as such, the OP has provided a valid conclusion, that a taxable benefit is being provided, and as such would be taxable.

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Replying to HandC:
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By andy.partridge
08th Nov 2017 15:44

Why do you think the client's objective necessarily exceeds the trivial benefit value?

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Replying to HandC:
By Tim Vane
09th Nov 2017 16:45

HandC wrote:

I understand your frustration, however, as this is a forum, surely you enrolled to either seek/provide additional support from/to OP's, rather than the route of denigrating users for not having the wealth of knowledge displayed by yourself.

The frustration is probably caused by you posting the original question anonymously. If you just fronted up and asked the question with your own name people would not get as annoyed.

BTW, you can stop referring to the OP in the third person. It's fooling nobody.

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By neiltonks
08th Nov 2017 11:35

Assuming these vouchers are the kind that can be used to pay for goods from a shop:

They're liable to Class 1 NICs through payroll at the time they're supplied to the employee.

For tax, it's as you say. They go on the P11D (or through payroll if the employer is voluntarily 'payrolling' such benefits).

The taxable value is the cost to the employer of providing them, UNLESS they're provided as part of an OpRA in which case the value is the higher of the cost of providing them and the amount of salary foregone. If the employee 'makes good' any of the cost (unlikely), this is deducted from the benefit value.

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By SteveHa
08th Nov 2017 16:22

As Andy has alluded to more than once, it may not exceed trivial benefits. It depends on information not provided.

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By andy.partridge
09th Nov 2017 15:10

Well, this one seems to have ended prematurely. If Anon would like to PM me I will explain.

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Replying to andy.partridge:
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By Portia Nina Levin
09th Nov 2017 15:47

Could you not just explain that £600 is a figure that falls in the range £500 to £750, and that, when divided by 2 gives £300?

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Replying to Portia Nina Levin:
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By andy.partridge
09th Nov 2017 15:55

Quote:

Could you not just explain that £600 is a figure that falls in the range £500 to £750, and that, when divided by 2 gives £300?

Thanks. I'll copy and paste if the PM ever arrives. No copyright is there. Check.

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By HandC
09th Nov 2017 16:30

Quote:

approx £500 to £750 per employee

I think that the vouchers of between £500 to £750 refers to the amount that the client is wanting to give to each of their employees?

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Replying to HandC:
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By andy.partridge
09th Nov 2017 16:36

Quote:

Quote:

approx £500 to £750 per employee

I think that the vouchers of between £500 to £750 refers to the amount that the client is wanting to give to each of their employees?

. . . and?

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Replying to HandC:
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By Portia Nina Levin
09th Nov 2017 16:42

Yes, but the OP didn't say the client wanted to give each employee that amount each year, so the possibility exists of spreading it over two years (which, after all, do begin and end just a day apart), such that the trivial benefits provisions might apply.

I suppose though that people missing this point is the fault of those that haven't bothered to spell out their thinking in glorious technicolor detail.

Or maybe more people need to let their minds out of its box once in a while.

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By Sj keates
24th Nov 2017 16:44

Does it have to be £500+ in one go?

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