Explanatory note

These Regulations amend the Income Tax (Pay As You Earn) Regulations 2003 (“the principal Regulations”) which make provision for the assessment, charge, collection and recovery of income tax in respect of pay as you earn income (“PAYE income”).

Chapter 3A (Benefits in Kind) of Part 3 of the principal Regulations, sets out a scheme to authorise employers to deduct tax from employees’ pay in respect of certain benefits in kind that they provide to their employees through PAYE.

Regulations 3 to 8 amend regulations 61A, 61B, 61D, 61G and 61I of the principal Regulations so that an employer can payroll the benefit of non-cash vouchers received, and credit-tokens used, by employees from 6 April 2017 onwards. An employer cannot voluntarily payroll the benefit of non-cash vouchers and credit-tokens where those benefits are treated as payments of PAYE income under sections 694 and 695 of the Income Tax (Earnings and Pensions) Act 2003.

Regulation 9 inserts new regulation 61LA to deal with situations where the employee has not paid the full amount expected to make good the cost of the credit-token by 1 June following the end of the tax year.

Regulation 10 amends regulation 87 of the principal Regulations to correct a minor error.

A Tax Information and Impact Note covering this instrument was published on 16 March 2016 alongside the draft clauses and explanatory notes for the Finance Bill 2016 and are available on the website at https://www.gov.uk/government/collections/tax-information-and-impact-notes-tiins. It remains an accurate summary of the impacts that apply to this instrument.