Employer Further Guide to PAYE and NICs - HM Revenue & Customs

Apportionment
If an award is made for the benefit of more than one
employee, see paragraph 36 for details of how to
apportion the award between those employees for
NICs purposes.
34 Valuing cash vouchers for NICs purposes
Cash vouchers are vouchers that can be exchanged for an
amount of money which is not much less than the expense
the employer or third party incurs in providing them. The
amount to include in gross pay is the surrender value of
the voucher.
35 Valuing non-cash vouchers for NICs purposes
The ‘value’ of a non-cash voucher is, apart from two
exceptions, the cost to you in providing it. If a third party is
providing it, then it is the cost to that third party. The cost
in providing a non-cash voucher is not normally the face
value unless, exceptionally, the cost in providing it and its
face value are the same.
The exceptions are luncheon vouchers and childcare
vouchers for which the ‘value’ is the face value of
the voucher.
The ‘cost’ in providing a non-cash voucher includes the
cost of:
• buying the goods or providing the services
• selecting and testing those goods or services
• storing, distributing and installing the goods or services
• servicing and other ‘after sales’ expenses.
As such, a non-cash voucher is valued for NICs purposes in
the same way as for tax.
36 Apportioning the value of vouchers between
employees for NICs purposes
If you provide a voucher which attracts a NICs liability for
the benefit of more than one employee, the value of the
voucher must be apportioned between those employees.
You must include in each employee’s gross pay the
proportionate amount of the total value each
employee enjoys.
If you are unable to determine the correct proportionate
amounts, you must split the total value equally and
include that amount in each employee’s gross pay.
Example 1
An employer buys a retail voucher at a cost of £300.
They provide the voucher to three employees with the
intention that:
• employee A will receive 50% of the voucher’s value
• employee B will receive 30% and
• employee C will receive 20%.
The amount of earnings to be included in each
employee’s gross pay is:
• employee A – £300 x 50% = £150
• employee B – £300 x 30% = £90
• employee C – £300 x 20% = £60.
Example 2
An employer buys a retail voucher at a cost of £300.
They provide the voucher to three employees with the
intention each employee will receive an equal amount
of the voucher’s value.
The amount of earnings to be included in each
employee’s gross pay is: £300 ÷ 3 = £100 each.
37 Non-cash vouchers exempt from NICs
The following types of non-cash voucher, provided to an
employee, are exempt from NICs liability:
• provided to an employee of a passenger transport
undertaking so long as
— arrangements for the provision were in operation on
25 March 1982 and
— the employee is earning at a rate of less than £8,500
in the year, and
— the voucher enables the employee to obtain transport
• for leave travel facilities for members of Her
Majesty’s forces
• for use to obtain fuel for a company car where a car fuel
tax charge arises on that provision
• for motoring expenses for a van provided for private use
where a tax charge arises on that provision
• for sports and recreational facilities so long as those
facilities are available generally to all employees
• long service awards so long as
— the length of service is not less than 20 years, and
— the cost of providing the voucher is not more than
£50 for each year of service and
— the employee concerned has not received another
long service award within the preceding 10 years
• social functions, such as a Christmas party, so long as:
— the function is open to all employees, and
— the cost of providing the voucher is not more than
£150 a head
• for travel by any means between home and work by an
employee who is disabled
• for the hiring of a cycle or cyclist’s safety equipment so
long as
— the facility is available to all employees and
— the cycle or equipment is used mainly for journeys
from home to work
21 Chapter 2 CWG2(2012)