TaxationWeb by Peter Arrowsmith, FCA
A useful NI 'tip' concerning non-cash vouchers, described by Peter Arrowsmith, FCAIt should be remembered that, from 6 April 1999, non-cash vouchers are subject to Class 1 National Insurance contributions (although not PAYE), i.e. they are to be accounted for through the payroll at the same time as cash payments.The definition, based on the tax legislation, is extremely wide and catches - for example:
- Air/holiday tickets
- Some car park/football, etc. season and other tickets
- Cheque for rail season ticket made payable to the rail company
- Theatre tickets, Wimbledon and the like
Inevitably many employers will not have recognised such transactions as non-cash vouchers and Inland Revenue guidance has been poor. Only in 2003, four years after the introduction of the legislation, has the Revenue's National Insurance Manual been updated to reflect these rules. Just in time for employer compliance officers to read the new contents and use them before the six years is up! Don't let your clients hear it from the Revenue first - forewarn them if they are affected.
For future transactions, employers can usually use a PAYE Settlement Agreement if they wish (which will also entail them bearing the employees tax liability, which otherwise would get coded out after the P11D is completed, or collected under self-assessment).
It should be noted that different rules apply where a third party (e.g. a supplier) gives the vouchers.
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