The Income Tax (Pay As You Earn) Regulations 2003

[F1Modification of the general rule: cessation of employment but continuing benefitU.K.

61H.(1) This regulation applies instead of regulation 61D(2) if during a tax year the employment of a specified employee ceases but the authorised employer continues to provide the specified benefit to that employee.

(2) Before the employment ceases the authorised employer must take the following steps—

Step 1

Determine at that time the number of remaining main relevant payments to be made in the employment.

Step 2

If the cost to the authorised employer of the specified benefit has changed, redetermine the cash equivalent [F2, relevant amount or amount foregone] in accordance with regulations 61E, 61F or 61G, as the case may be, otherwise the cash equivalent [F3, relevant amount or amount foregone in respect] of the specified benefit is that previously determined for the tax year under step 1 of regulation 61D(1).

The result is the revised cash equivalent [F3, relevant amount or amount foregone in respect] of the specified benefit provided during the employment.

Step 3

Calculate the taxable amount of the benefit provided to date by—

(a)determining the number of main relevant payments that have been made to date, then

(b)multiplying that number by the Taxable Amount of the Benefit obtained under step 3 of regulation 61D(1).

Step 4

Subtract the taxable amount of the benefit provided to date (the amount obtained from step 3) from the revised cash equivalent [F3, relevant amount or amount foregone in respect] of the benefit provided during the employment (the amount obtained from step 2).

Step 5

Divide the amount obtained from step 4 by the number obtained at step 1.

The result is the Adjusted Taxable Amount of the Benefit.

Step 6

Add the Adjusted Taxable Amount of the Benefit to either—

(a)the next main relevant payment, where that is the only main relevant payment remaining in the employment; or

(b)each of the remaining main relevant payments, where the number of remaining main relevant payment determined under step 1 of paragraph (2) is more than one,

and apply step 5 of regulation 61D(1) to that amount or amounts, as the case may be.]