Creating a Company Car (Infotype 0222) Record with Reduced Car Benefit 

Use

Class 1A National Insurance contributions are calculated on the basis of the net car benefit. This figure is reached by reducing the full car benefit, if necessary, according to the following:

  1. Business travel
    2.

    Business miles travelled

    Amount of reduction

    2500 to 17999

    One third

    18000 or more

    Two thirds

    If the car is only available for part of the year, a pro-rata calculation can be made to determine the business mileage threshold.

  2. Age of the car

    3. The full car benefit, reduced as necessary for business mileage, is reduced by a further one third if the car is 4 years old or more at the end of the tax year in which it is made available.

  3. Periods of unavailability

    4. If the car is unavailable for any part of the tax year, the car benefit can be reduced to take account of the number of days the car was unavailable. The full car benefit is reduced if the car is not available for 30 consecutive days or more. This reduction is made after any adjustment has been made for business travel and/or age.

  4. Payments for private use

If the employee makes a payment for the private use of the car, this can be deducted from the car benefit, after taking into account any other deductions.

Scenario

A car is made available to an employee on 01.04.1998. The car list price is £18,500.00, and it has an optional accessory which costs £450.00. In addition, the employee makes a monthly payment of £150.00 for the private use of the car.

For the period 01.05.1998 to 31.05.1998 the car is at a garage undergoing repairs.

Procedure

  1. Choose Human resources ® Personnel Management ® Administration, then Maintain master data.

    2. The Maintain HR Master Data screen appears.

  2. In the Personnel number field, enter the employee's personnel number.

    3. Use the matchcode function to find a number you do not know.

  3. Access the Company Cars (infotype 0222) record by entering the infotype name or number in the Infotype field.
  4. Choose Create.

    5. The Create Company Cars GB (Infotype 0222) screen appears.

  5. In the From field, enter 01.04.1998.

    6. You will generally create the record for a year. However, as part of start of year processing, you should copy all existing Company Cars records to new records. For more information, see Company Car Update.

  6. In the Identification details group box, enter the relevant details and select Private use.
  7. In the Incl. car price group box, enter £18500 in the List price field and £450 in the Accessor. field.

    8. The system automatically calculates the car price and the full car benefit.

  8. In the Reductions group box, set the Paymts.priv.use indicator.
  9. Save your entries.
  10. Choose Unavail. fast entry.

    11. The Maintain Comp. Car Unavail. screen appears.

  11. Choose Create and enter the necessary data.
  12. Save your entries and return to the previous screen.

Recurring Payments/Deductions (Infotype 0014)

By setting the Paymts.priv.use indicator on the Company Cars infotype, you have recorded the fact that the employee makes a payment for the private use of the company car. However, the actual amounts need to be recorded in a net deduction wage type in infotype 0014.

  1. Access the Recurring Payments/Deductions (infotype 014) record by entering the infotype name or number in the Infotype field.
  2. Choose Create.

    3. The Create Recur. Payments/Deds (Infotype 0014) screen appears.

  3. Enter the period for which the payment is to be made.
  4. Enter a net deduction wage type, for example D300 (payments private use company car), in the Wage type field, and an amount.
  5. Enter the appropriate payment dates.
  6. Save your entries.

Result

The appropriate records have now been created to enable the Payroll Accounting component to calculate the correct Class 1A National Insurance contributions and make the correct deductions from the employee's earnings.