Does a taxable benefit in kind (BiK) arise if an employer pays for eyesight test and for the resultant glasses?
An employer can pay for the cost of an eyesight test and also the cost of glasses or contact lenses without the cost being a taxable benefit where an employee is required to use a visual display unit (VDU) as part of his or her normal duties.
The regulations provide for an exemption from a taxable benefit for these costs if the following two conditions are met.
• Condition A is that the provision of the test or appliances (i.e. glasses or contact lenses) is required by regulations made under the Health and Safety at Work etc. Act 1974.
• Condition B is that tests and appliances of the kind mentioned above are made available generally to those employees of the employer in question for whom they are required to be provided by the regulations.
The provision or payment towards the cost of spectacles for general use, including use with a VDU, which do not include a special prescription for VDU use will give rise to a taxable benefit, i.e. the costs of the prescription must be split to demonstrate the cost of VDU v the cost of general use in order to avoid a taxable benefit arising. It is advisable to keep the itemised receipts for both the eye tests and the prescription so this split can be identified easily.
If, however, the eyesight test identifies a general need for glasses, and as well as the special prescription for VDU use, the employer pays for or reimburses the whole bill, liability for Class 1 NICs arises on the amount which exceeds the VDU-related prescription. This is the pecuniary liability principle where a business settles a debt for an employee.
If the employer makes arrangements for the optician to supply the required glasses to the employee, this will be disregarded in relation to Class 1 NICs under the payment in kind provisions.
In summary, the employer can only reimburse the cost of the VDU element of the prescription and eye test – any other payment will incur a pecuniary liability or a BIK on the total cost. 
 Reproduced from Croner Taxwise