Commentary on Sections Example 3 £150(Pe) – £50(E) = £100 Section 94: Benefit of credit-token treated as earnings
349.This section provides the means of charging the benefit of the token to income tax. It derives from section 142(1) of ICTA.
350.Subsection (1) treats the cash equivalent of that benefit as earnings from the employment. Amounts treated as earnings under this Chapter are employment income charged under Part 2 of this Act. They are earnings for the tax year in which the credit-token is used – see Note 7 in Annex 2. For the purposes of Chapters 4 and 5 of Part 2 they are treated as received in that year – see sections 19(2) and 32(2) of this Act.
351.The timing rule for receipt of the cash equivalent of credit-tokens is different from that for non-cash vouchers. The focus is on when the token is used. This is because expense is incurred each time a credit-token is used, even if it is not paid at that time. Regardless of when the provider of the credit-token pays for the goods or services, the amounts treated as earnings for the tax year in which the credit-token is used are treated as received in that year.
352.Subsection (2) defines “cash equivalent” as the net cost of provision after deducting any amount made good by the employee.
353.Subsection (3) defines “cost of provision”.
354.Subsection (4) provides an apportionment rule equivalent to that in sections 77 and 87(6) of this Act.
355.Section 91 of this Act, along with this section, extends the charge to treat the benefit of use of a credit-token by a member of the employee’s family as earnings of the employee.