Proration of Car or Van Fuel Benefit

You need to use the Available From and Available To dates to ensure that the proration of car or van benefit is calculated correctly.

The calculation identifies the benefit annual value based on the available from and to dates. If there's no Available To date provided, the end of tax year is the default date. If the Available To date is provided, the benefit value is calculated or recalculated based on the period of availability. This continues to be taxed for the remaining tax year, or until the last standard process date. Any outstanding amount not previously taxed is apportioned across all periods of the tax year, or until employee termination.

You shouldn't end-date the component but instead enter the Available To date. After the component is end-dated, it isn't included in any future payroll processes.

Here are some examples explaining different scenarios where an employee has a car or van benefit.

When the car or van benefit is provided midyear

Sample values

Field	Value
Component Start Date	01 May 2021
Component End Date	Open
Car Available From Date	06 June 2021
Car Available To Date	Open

Here's how the calculation works:

• Using 06 June 2021 as the car available date, the process calculates the prorated annual taxable amount using the days between the available date and the end of the tax year. The calculation is performed every period until one of these events:
  • The car benefit is stopped using the available from and to dates.
  • The employee gives up the benefit by entering the Available To date.
  • Tax year end date 05-April is used for open ended components.
• The taxable amount calculated for this car each period will be reduced by the amount taxed in previous periods.
• The remainder is divided by the number of remaining periods. In this examples, this value is 10 assuming payroll run for the month of June 21 to get the periodic taxable amount.
  This is the taxable amount for the period.

  Important:

  The component start date and car available from date are different and the calculation will always take the Available from date of the car and not the component start date. Ending the component will stop all processing.

When there's a car or van change midyear

Sample values for the existing car

Field	Value
Component Start Date	01 May 2021
Component End Date	Open
Car Available From Date	12 May 2021
Car Available To Date	21 Jan 2022

Create a new component.

Samples values for the new car

Field	Value
Component Start Date	10 Jan 2022
Component End Date	Open
Car Available From Date	22 Jan 2021
Car Available To Date	Open

The car benefit for the old car is recalculated as show here:

• The benefit amount is calculated from 12 May 2021 to 21 Jan 2022 is used to give the new prorated annual taxable amount.
• Reduce any amount already taxed. This gives the remaining amount still to be taxed on this car.
• This amount is divided by the periods remaining (3 periods, if the payroll is run for Jan 2022).

  This is the taxable amount for the old car.

Here's how the calculation works for the new car:

• The benefit amount is calculated from 22 Jan 2022 to 05 April 2022 (last date of tax year) to give the annual prorated annual taxable amount.
• Reduce any amount already taxed. This gives the remaining amount still to be taxed until the end of the tax year.
• This amount is divided by the periods remaining (3 periods, if the payroll is run for Jan 2022).

  This is the taxable amount for the new car.

Employee gives up car or van benefit while still in employment

Sample values

Field	Value
Component Start Date	06 April 2021
Component End Date	Open
Car Available From Date	06 April 2021
Car Available To Date	26 Jan 2022

Here's how the calculation works:

• The process uses the available from and to dates from 06 April 2021 to 26 Jan 2022 to calculate the new prorated annual taxable amount.
• This amount is divided by the number of periods remaining (3 periods, if the payroll is run for Jan 2022).

  This is the periodic taxable benefit amount for each pay period until the end of the tax year because the employee is still in employment and liable to pay tax on the benefit

When the car or van benefit stops due to employee termination

• The process uses the available from and to dates.
  Note: Don't end date the component because the payroll process won't process the benefit.
• If there's no Available From Date provided, the process uses the benefit Component Start Date and Available To Date.
• The process checks for Last Standard Process Date (LSPD) to see if the benefit was end dated. If LSPD exists and the employee is terminated:
  • The benefit’s taxable value is recalculated using the Available From Date.
  • The recalculated taxable benefit amount is reduced by the amount already taxed.
  • If this result is a negative amount, this is a case of termination that was a late notification
• The resulting amount affects the taxable value of the benefit by either:
  • adding to the taxable value, or
  • in case of a negative value, reducing the taxable liability.