HM Revenue and Customs has published draft regulations and a draft explanatory memorandum for a technical consultation. 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.
Learn comment
Originally, HMRC took the view that employers would only be able to payroll a small number of benefits. By the time legislation had been passed, there had been something of a U-turn in the employers were told they could payroll all benefits except three:
Accommodation Beneficial loans Non-cash vouchers and credit tokensWe never understood why non-cash vouchers were excluded because, they had to be processed through the payroll for Class 1 Ni if a tax liability arose.
Please note:
There is no change to the statutory exemption on Child Care Vouchers in that employers only have to report the excess above the relevant maximum allowable amount. There has always been a requirement to process cash vouchers (travellers’ cheques, premium bonds and postal orders) through the payrollIt is good to see that this anomaly is being corrected from 6 April 2017.
