PART 3DEDUCTION AND REPAYMENT OF TAX
F1CHAPTER 3ABENEFITS IN KIND
Modification of the general rule: in-year adjustments: change to the benefit during the year with effect from the date of the change61I
1
This regulation applies instead of regulation 61D(2) if during a tax year there is a change to the specified benefit provided to a specified employee and, for the purposes of calculating the cash equivalent of that benefit under ITEPA, that change has effect from the date the revised benefit is provided to the employee.
2
Subject to paragraph (4), the authorised employer must take the following steps—
Step 1
Before making the next main relevant payment after the change to the specified benefit has taken effect, calculate the revised cash equivalent of the specified benefit by—
a
determining the cash equivalent of the specified benefit that has been provided in the tax year accordance with sections 121, 150, 155, 161 or 203 of ITEPA, as the case may be, then
b
determining the cash equivalent of the specified benefit, that will be provided for the remainder of the tax year, in accordance with regulation 61E, 61F or 61G, as the case may be, and
c
adding these numbers together.
Step 2
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 determined under step 3 of regulation 61D(1).
Step 3
Subtract the taxable amount of the benefit provided to date (the amount obtained from step 2) from the revised cash equivalent of the specified benefit (the amount obtained from step 1).
Step 4
Determine the number of remaining main relevant payments to be made in the tax year.
Step 5
Divide the amount obtained from step 3 by the number obtained at step 4.
The result, where the amount is a positive value, is the Increased Taxable Amount of the Benefit.
The result, where the amount is a negative value, is the Reduced Taxable Amount of the Benefit.
Step 6
Add the Increased Taxable Amount of the Benefit to, or subtract the Reduced Taxable Amount of the Benefit from, the next main relevant payment and apply step 5 of regulation 61D(1) to that amount.
3
On making any subsequent main relevant payment in that year, the employer must add the Increased Taxable Amount of the Benefit to, or subtract the Reduced Taxable Amount of the Benefit from, that payment and apply step 5 of regulation 61D(1) to that amount.
4
Where the change to the specified benefit occurs in the final tax month of a tax year and the authorised employer is not able to take the steps set out in paragraph (2) before the final main relevant payment for that year is made that employer must—
a
comply with steps 1 to 5 of paragraph (2) before the first main relevant payment of the next tax year (“tax year 2”) is made;
b
add the Increased Taxable Amount of the Benefit to, or subtract the Reduced Taxable Amount of the Benefit from, the first main relevant payment to be made in tax year 2; and
c
apply step 5 of regulation 61D(1) to that amount.
Pt. 3 Ch. 3A inserted (with effect in accordance with reg. 1(4) of the amending S.I.) by The Income Tax (Pay As You Earn) (Amendment No. 4) Regulations 2015 (S.I. 2015/1927), regs. 1(1), 6