Commentary on Sections Example 3 £150(Pe) – £50(E) = £100 Section 95: Disregard for money, goods or services obtained
356.This section eliminates any charge on the money or money’s worth or cost of the goods or services received in exchange for vouchers, or through the use of a credit-token, where the cash equivalent of the benefit is treated as earnings under this Chapter (or would be, but for a dispensation under section 96) of this Act.
357.It derives from sections 141(1)(b), 142(1)(b) and 143(1)(b) of ICTA.
358.Subsection (1) sets out the circumstances in which this section operates. The addition of subsection (1)(b) prevents the goods and services obtained by use of the voucher being within Chapter 10 of Part 3 of this Act if a dispensation is given. This is a minor change to the law. See Change 20 in Annex 1.
359.Subsection (2) provides that the money, goods or services obtained are disregarded for the purposes of the Income Tax Acts.
360.That disregard extends to goods or services obtained through use of a cash voucher. Normally, a cash voucher is exchanged for a sum of money and tax is charged on that sum. If goods or services are provided, tax will not be charged on the value of those goods or services.
361.Extending that disregard to goods and services obtained by use of a cash voucher is a minor change to the law. See Change 20 in Annex 1.
362.The disregard has been extended to things obtained by the use of vouchers and tokens in certain cases where the benefit thus obtained itself is exempt and that exemption depends on the goods and services obtained by the use of the vouchers or tokens themselves being exempt if obtained direct. (The exemptions in question are those given by section 266(1)(a) or (e) of this Act (exemption of non-cash voucher where used to obtain parking provision or third party entertainment), section 267 of this Act where subsection (2)(a) or (f) of that section applies (exemption of credit-token where used to obtain parking provision or third party entertainment) and section 268 of this Act (exemption of non-cash voucher or credit-token where used for incidental overnight expenses)). It is simpler to extend the disregard in this way than to allow the things obtained by the use of these vouchers and tokens to fall into other charging provisions, only to be exempted by the exemptions that apply in those cases.
363.Subsection (3) ensures that deductions available under sections 362 and 363 of this Act (deductions where non-cash voucher or credit-token provided) are not affected by the disregard.
364.Subsection (4) clarifies the application of the disregard for transport vouchers.