Leaver with Benefits: Example
The benefit for Medical (for example) is for a calendar year and each year has its own rate. But the benefit is entered at the start of the tax year, that is, 06 April.
Field | Value |
---|---|
Effective From date of the Medical component |
06 April or the start date of the employee, if later
|
Available From | 06 April or the start date of the employee, if later |
Available To | 05 April |
Annual Rate | Enter the amount, for example, £2000 |
Annual Amount | Select this check box |
Processing Rule | Tax across remaining tax periods |
The calculation process for April, May and June will assume there are 12 tax periods as employee is still active and will assume 05 April as the default. This results in the benefit value of £166.66 per period (2000/12 using 06 April as benefit start date)
If the employee terminates in July (31 Jul):
- On the existing component enter Available to date as 31 July 2023;
This will recalculate the benefit for April through July as £641.09 (117 days x 5.4794)
- In the payroll run for July, the remaining benefit amount will be calculated as £641.09 minus the already processed amount of 3 months (£166.66 x 3 = 499.98 resulting in £141.11
The July deduction will adjust any difference in tax (if required) to ensure the correct amount of benefit is taxed upon termination.