The Income Tax (Pay As You Earn) (Amendment No 3) Regulations 2016

Financial Conduct

The Income Tax (Pay As You Earn) (Amendment No 3) Regulations 2016


Amendments have been made to extend the voluntary framework in Chapter 3A of the Income Tax (PAYE) Regulations.  They allow employers to opt to collect income tax on non-cash vouchers and credit tokens through PAYE.


An amendment is made to section 684 of the Income tax (Earnings and Pensions) Act 2003 (ITEPA) to extend the existing powers made to enable the Commissioners of HMRC to make Regulations authorising employers to collect and repay income tax through PAYE in respect of benefits in kind provide to employees.  It has been extended to include Non-cash vouchers such as vouchers to spend in high street shops and credit tokens used to obtain money, goods and services.  It also includes cars, vans and other related benefits.


The Amendment applies to the UK only and from 6/4/2016 an employer could choose to payroll some or all of the benefits in kind that they pay to employees.  This includes any benefit except employer provided accommodation.


The expected impact on businesses, charity and voluntary bodies is a further reduction in their admin burden.  They will no longer need to report benefits to HMRC if they are payrolled.