Are discount vouchers that are available to both employees and the general public taxable as an employment benefit?

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Vouchers given to employees are not taxable as long as they are not provided on more preferential terms than those that apply to the public generally. For example, if discount vouchers are issued to anyone spending over a certain amount in a retail store and, because they are shopping as customers, they are also given to employees, there is no employment benefit.

This situation is specifically covered in the tax legislation. Sections 78, 85 and 93 of the Income Tax (Earnings and Pensions) Act 2003 state, with reference to cash vouchers, non-cash vouchers and credit-tokens, that they are excluded from a tax charge if

• they are of a kind made available to the public generally, and
  
  
• they are provided to the employee or a member of the employee's family on no more favourable terms than to the public generally.

The term "credit-token" means not just a credit card but any card or document that allows someone to obtain money, goods or services on credit.

The same rule applies to the provision of living accommodation and loans. For example, employees of a local authority are not taxed on the provision of a council house if it is provided on terms that are not more favourable than non-employees in similar personal circumstances (section 98). Similarly, an employee is not taxed on a loan that is obtained from the employer on normal commercial terms (section 176).

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