Income Tax Citation, commencement and effect 1 1 These Regulations may be cited as the Income Tax (Pay As You Earn) (Amendment No. 3) Regulations 2016 and come into force on 19th December 2016. 2 Regulations 3 to 9 have effect for tax year 2017-18 and subsequent tax years. Amendment of the Income Tax (Pay As You Earn) Regulations 2003 2 The Income Tax (Pay As You Earn) Regulations 2003 are amended as follows. Amendment of regulation 61A 3 In regulation 61A (interpretation), for the definition of “specified benefit” substitute— “specified benefit” means any benefit treated as earnings under any of the following provisions of Part 3 of ITEPA (employment income: earnings and benefits etc. treated as earnings)— section 87 (non-cash vouchers) except where section 694 (non-cash vouchers: treated as payments of PAYE income) of ITEPA applies, section 94 (credit-tokens) except where section 695 (credit-tokens: treated as payments of PAYE income) of ITEPA applies, section 120 (car) , section 149 (car fuel) , section 154 (van) , section 160 (van fuel) , section 203 (employment-related benefit); Amendment of regulation 61B 4 In regulation 61B (PAYE: benefits in kind)— a in paragraph (2)(b), for “61K and 61L” substitute “61K, 61L and 61LA”, and b in paragraph (3), for “61K or 61L” substitute or “61K, 61L or 61LA”. Amendment of regulation 61D 5 In regulation 61D(3) (deduction and repayments of tax: general rule), for “61K and 61L” substitute “61K, 61L and 61LA”. Amendment of regulation 61G 6 In the heading to regulation 61G (method of calculating the cash equivalent of employment-related benefits), before “employment-related benefits” insert “non-cash vouchers, credit-tokens and”. 7 In regulation 61G(1)— a before “any” insert “a non-cash voucher, credit-token or”, and b for “section” substitute “sections 87, 94 or”. Amendment of regulation 61I 8 In regulation 61I(2) (modification of the general rule: in-year adjustments: change to benefit during the year with effect from the date of change), in paragraph (a) of step 1 after “sections” insert “87, 94,”. Insertion of regulation 61LA 9 After regulation 61L (modification of the general rule: failure to make good fuel benefit) insert— Modification of the general rule: failure to make good benefit of credit-token 61LA 1 This regulation applies where the specified benefit is a credit-token and the specified employee has not made all of the making good payments referred to in regulation 61G(2)(b) before 1st June following the end of the tax year (“tax year 1”) in which the credit-token was used. 2 Before making the first main relevant payment after 1st June in the following tax year (“the first main relevant payment in tax year 2”) the authorised employer must take the following steps— Step 1 Calculate the outstanding taxable amount of the benefit of the credit-token used in tax year 1 by- a determining the cash equivalent of the benefit of the credit-token used in that tax year in accordance with section 94 ITEPA; b subtracting from that amount the cash equivalent of the benefit of the credit-token used as determined under step 1 of regulation 61I(2) as modified by regulation 61J(3) during that tax year. Step 2 Add the amount obtained from step 1 to the first main relevant payment in tax year 2 and apply step 5 of regulation 61D(1) to that amount. 3 Where this regulation applies regulation 61G(2)(b) does not apply in respect of credit-tokens used in tax year 2. Amendment of regulation 87 10 In regulation 87(4) (interpretation)— a at the beginning insert “In this regulation—”, and b for “Related” substitute “related”. Justin Holliday Nick Lodge Two of the Commissioners for Her Majesty’s Revenue and Customs 23rd November 2016