If you’re driving a company car, understanding its P11D value is crucial. This figure, used by HMRC to calculate your company car tax, reflects the car’s price and any extras added when it was new. In this guide, we’ll explain how the P11D value is worked out, why it matters, and what it means for your tax bill.
What is a P11D form used for?
A P11D form is a document your employer submits to HMRC to report any benefits-in-kind (BIK) you receive as part of your job, like a company car, private health insurance, or other perks. When it comes to cars, the P11D value is particularly important because HMRC uses it to calculate how much company car tax you’ll need to pay.
The form ensures that the taxable value of your benefits is accurately recorded and added to your income for tax purposes. It’s worth noting that while your employer files the P11D form, you’re responsible for any tax owed on the benefits you receive. For company cars, the tax amount is based on the car’s P11D value, its CO2 emissions, and your personal income tax rate.
How is P11D value calculated?
It’s calculated using the car’s list price, including VAT and delivery charges, but excludes the first registration fee and annual road tax.
Here’s how it breaks down:
List Price: This is the cost of the car as listed by the manufacturer when it was brand new
VAT: Value Added Tax is included in the list price.
Delivery Charges: Any costs associated with delivering the car to the dealer or buyer are also included.
If optional extras were added when the car was new, their cost is also included in the P11D value, which can bump up your tax bill. That means choosing those heated seats or fancy alloys could cost you more than just the initial upgrade price.
For example, car A is priced at £15,480 on the road. It is made up of £14,655 list price (basic price plus VAT), £645 delivery fees, £125 annual Vehicle Excise Duty and £55 first registration fee.
Its P11D value would be £15,300 – list price plus delivery fees, but without road tax and first registration fee.
Meanwhile, car B is also priced at £15,480 on the road. Its manufacturer does not list a separate delivery charge, but the list price is stated as £15,275. It is subject to VED at £150 a year, and a first registration fee of £55. Therefore the P11D value is £15,275.
How does P11D value affect company car tax?
The P11D value of a company car is critical because it directly determines how much company car tax you’ll need to pay. HMRC uses this value to calculate the Benefit-in-Kind (BIK) tax — a charge applied to the “perk” of having a car provided for personal use.
The calculation is based on:
The P11D value: This includes the car’s list price, VAT, and delivery charges but excludes the first registration fee and road tax.
CO2 Emissions: Cars with lower emissions are taxed at a lower BIK rate, rewarding more environmentally friendly options.
Your Income Tax Band: The BIK tax is applied at either 20% or 40%, depending on whether you’re a basic or higher-rate taxpayer.
Where can I find the P11D value of a car?
Finding the P11D value of your car is straightforward, and there are several reliable sources to check:
Manufacturer websites: Most car manufacturers provide detailed specifications for their vehicles online, including the P11D value. This information is usually listed alongside the car’s pricing details.
Vehicle documentation: For older vehicles, check the original invoice or order paperwork, as the P11D value is often included in the breakdown of costs.
HMRC-approved tools: Some tax calculators and online tools specifically list P11D values for cars, which can be a helpful resource if other methods aren’t available.
Who pays P11D tax?
P11D tax is essentially a tax on benefits received from your employer, while the responsibility for filing the P11D form lies with your employer, it’s you, the employee, who pays the associated tax.
Employees responsibility: Your employer submits a P11D form to HMRC at the end of each tax year. This form details any benefits or perks you’ve received, such as a company car or private healthcare, in addition to your salary.
Employee Liability|: Based on the information provided in the P11D form, HMRC calculates the Benefit-in-Kind (BIK) tax you owe. This tax is deducted from your salary, usually through adjustments to your PAYE (Pay As You Earn) tax code.
Tax Amount: For company car drivers, the tax amount depends on the P11D value of the car, its CO₂ emissions, and your personal income tax band.
In short, while your employer does the admin, the tax bill lands with you. This makes it even more important to know your car’s P11D value, so you can budget for the tax costs and avoid any surprises.
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