P11D – How to calculate company car benefits

by Nicky Jones | 6 May, 2024 | P11D

P11D – How to calculate company car benefits

When it comes to providing perks within the workplace, a company car often tops the list. However, when you’re tasked to ‘calculate company car benefits’ for tax purposes, the process can be quite intricate.

The P11D form plays an essential role here, capturing the value of ‘Benefits in Kind.’ Naturally, this includes the privilege of having a company car available for private needs. This value isn’t a simple figure pulled from thin air. It involves a detailed calculation based on the car’s list price. Nor does the complexity end there. The list price needs to factor in adjustments for any optional features and capital contributions made by the employee.

Breaking Down the Calculation

The starting point for calculating the company car benefit is the vehicle’s list price. This figure forms the basis of the calculation. However, it’s important to note that there are additional factors that can adjust this initial value.

Adjusting for Extras and Contributions

Optional extras that enhance the value of the car, as well as any capital contributions made by the employee towards the cost of the car, need to be factored into the final assessment. These adjustments are vital in arriving at an accurate benefit valuation.

Electric Vehicles and Low Emission Cars

For fully electric vehicles that boast zero CO2 emissions, the process is somewhat simplified with a fixed taxable value: 2% of the list price. Meanwhile, cars with CO2 emissions ranging from 1g/km to 50g/km require a more nuanced calculation, taking into account both the CO2 emissions and the pure electric mileage range.

Higher Emission Vehicles

Vehicles emitting more than 51g/km of CO2 are evaluated based on their emissions levels and fuel type. This ensures that the environmental impact of the car is adequately reflected in the benefit calculation.

No Benefit Tax on Electric Charging at Work

An encouraging note for electric vehicle users is the absence of a taxable benefit on workplace charging. This exemption is part of the government’s initiative to promote the use of greener transport options.

Expert Assistance with P11D

Navigating the specifics of P11D can be complex, particularly when it comes to calculating the taxable benefit of a company car. However, you don’t have to tackle it alone. As experts in P11D, we’re on hand to offer our expertise and ensure that your company car benefits are calculated accurately and efficiently.

Our in-depth knowledge of the regulations and our keen attention to detail mean we can provide tailored assistance to meet your needs. So, if you’re unsure about any aspect of the calculation or need professional advice, we’re here to help. Reach out to us today – we’d be happy to see how we can partner in your car benefit calculation success!

If you’d like to speak to one of our experts about P11D’s, please call 01243 782 423, or email from our contact page and we will be in touch!

We also update our YouTube Channel regularly with new content, see here: Lewis Brownlee YouTube channel.

What gets reported on a P11D?

by Nicky Jones | 1 May, 2024 | P11D

What gets reported on a P11D?

Understanding what gets reported on a P11D is crucial for any employer providing certain expenses and benefits to employees. This mandatory form details the benefits employees receive because of their work. It’s not just about listing items; it’s about accurately valuing each benefit.

So, let’s take a quick look at what the P11D encompasses and how to handle its complexities.

P11D – What Gets Reported

You’ve made your way to this article. So, the chances are you’re filling in a P11D and are unsure whether a benefit of some description needs reporting. Therein lies the crux of the difficulty around the form. Knowing what gets reporting in a P11D can be tricky.

The P11D form though is a vital document for employers. It meticulously outlines the various benefits that employees receive as part of their employment. It’s not merely a formality but a crucial declaration of the “value” each employee has gained. This value could reflect the actual cash price, the prevailing market value, or the notional cost borne by the employer.

Benefits to include on a P11D

As such, the array of benefits that typically feature in a P11D form includes, (but is not limited to):

Company Car: A staple of employee perks, representing a significant benefit.
Van Benefit: For employees who utilise a van for both work and private purposes.
Gift Vouchers: A popular choice for employee incentives and rewards.
Private Medical Insurance: Often offered as part of a comprehensive benefits package.
Accommodation: Provided to employees, especially when relocation is involved.
Pecuniary Bills: Bills paid by the employer that would otherwise be a personal expense.
Employee Loans: Loans provided at favourable rates, exclusively for employees.
Professional/Private Memberships: Subscriptions that support an employee’s professional development.

Calculating the precise ‘value’ of these benefits can sometimes present a challenge. These are often varied both in nature and the conditions under which they are provided. It’s a task that calls for careful consideration.

So, what else do you need to consider when it comes to P11Ds? Here are a few helpful pointers from our P11D experts:

The Value of Accuracy

Remember, when filing your P11D, precision is your best friend. The “value” you report must reflect reality. Whether it’s a sleek company car or a subscription to a trade body, the numbers must add up correctly. Miss the mark, and you could face HMRC’s scrutiny.

Streamlining Your P11D Process

As with any tax-related task, the P11D can seem daunting. So, it’s important to approach it with a strategic mindset. By understanding what gets reported on a P11D in the first place, you’ll be starting on the right foot. Then, implement a system to track these benefits throughout the year. That way you’ll save time when reporting season arrives!

Filing a P11D – What is it and do I need to think about it?

by Nicky Jones | 1 May, 2024 | P11D

Filing a P11D – What is it and do I need to think about it?

Navigating the complexities of tax reporting can be daunting for any business. Indeed, the intricacies of employee benefits and expenses can prove quite a minefield! The P11D form, of course, plays a critical role in this process. It basically serves as the vehicle to declare the end-of-year expenses and benefits provided to employees. Simultaneously, it facilitates the disclosure of that information to HM Revenue and Customs (HMRC). In doing so, it ensures that companies meet their reporting obligations and correctly assess any additional tax liabilities. So filing a P11D is a crucial part of tax reporting that you will need to get to grips with if running a business.

Diligent completion and submission of the P11D form is a statutory requirement for all employers. And, reinforcing the transparency and accuracy of the tax system, it’s an integral way to ensure you’re paying the right amount of tax on what you give to your employees.

Understanding the P11D Form

So, what do you need to know about filing a P11D? Well, first things first, you need to understanding what the P11D actually is. We always explain it as the annual requirement for employers to report the value of certain benefits and expenses provided to their employees. It basically details any perks or reimbursements that may be subject to tax outside of the standard payroll.

The Requirement for a P11D(b) Form

In instances where benefits are dispensed across the workforce, a P11D(b) form comes into play. This document encapsulates the total value of benefits afforded to employees and is critical for the accurate calculation of National Insurance contributions.

National Insurance Contributions on Benefits

Once the totality of taxable benefits has been determined, businesses must remit a Class 1A National Insurance contribution at a rate of 13.8% on the collective value. This payment is separate from the regular contributions deducted through payroll and directly correlates with the benefits provided.

Exemptions for Reimbursed Expenses

It’s important to distinguish between taxable benefits and reimbursed business expenses. Costs borne by employees that are strictly for business purposes, meeting the ‘wholly, exclusively and necessary’ criteria, are not reported via the P11D as they do not constitute a benefit.

Submission Deadline for P11D and P11D(b)

The submission of both P11D and P11D(b) forms is time-sensitive. They have a statutory deadline of 6th July 2024. Good news though! Electronic filing is now the standard. So, the process has been streamlined ensuring more timely compliance is possible.

Expert Accounting Guidance for P11D Compliance

As the deadline for submitting P11D and P11D(b) forms to HMRC approaches, it’s crucial for employers to ensure accuracy in their reporting of employee benefits and expenses.

At this time, the expertise of seasoned accountants (like us!) becomes invaluable. As specialists in tax reporting and compliance, we can guide you through the process. So, if you need help discerning the nuances of taxable benefits or advise on exemptions, we can help. It’s one of the most certain ways you can help ensure you avoid the unthinkable… overpaying!

So, if you have any uncertainty around filing a P11D or P11D(b) at all, please do reach out. By partnering with us, you not only guarantee adherence to HMRC regulations but also secure peace of mind knowing that your tax obligations are managed professionally!

If you’d like to speak to one of our experts about P11D’s, please call 01243 782 423, or email from our contact page and we will be in touch!

We also update our YouTube Channel regularly with new content, see here: Lewis Brownlee YouTube channel.

Expenses and Benefits for Employers – what do I need to know?

by Nicky Jones | 31 May, 2023 | P11D

Expenses and Benefits for Employers – what do I need to know?

As a UK employer, it is important to understand the rules and regulations around expenses and benefits for employees. Failure to comply with these regulations can result in financial penalties.

Here’s what you need to know:

What are expenses and benefits?

Expenses are costs that employees incur as part of their job, such as travel or accommodation expenses. Benefits are generally non-cash items that employees receive as part of their employment. These might include items like a company car or health insurance. But, they could also include the transfer of assets, goods, or services made available by the employer.

What do I need to report on a P11D form?

If you reimburse employees for work related expenses incurred ‘wholly, exclusively and necessary’ for the proper performance of their duties, these items do not get reported on P11D forms.

The P11D forms are used to report a benefit provided to employees by virtue of their employment. The P11D forms should report the value the employee has received; this might be the cash value, the market value, or notional cost to the employer. Subject to the type of benefit provided, the method of valuing the benefit can be different. If you are unsure how the benefit should be assessed, please speak with a suitably qualified accountant.

What are the deadlines for submitting P11D forms?

P11D forms must be submitted to HM Revenue & Customs (HMRC) by 6th July following the end of the tax year (5th April). You must also provide each employee with a copy of their individual P11D form by the same deadline.

What are the tax implications of benefits?

Most benefits are taxable and are subject to Income Tax, but some benefits can also be subject to National Insurance contributions. Whether national insurance applies is usually dependant on whether the BIK is a readily convertible asset. If you are unsure, please seek professional advice.

It is also important to remember that not all BIK are taxable – some benefits such as the provision of one mobile phone, onsite parking and a workplace nursery are specifically exempt by the tax legislation. Exempt benefits are not reported on P11D forms.

There are many exempt benefits, so if you are unsure, please seek advice.

In summary, as an employer, it is important to understand the rules and regulations surrounding expenses and benefits for employees. You should ensure that you report all relevant benefits on the P11D forms and pay any tax owed in a timely manner to avoid penalties. By staying informed and up to date, you can ensure that your business operates within the bounds of the law.

Call us on 01243 782 423, or email from our contact page and we will be in touch!

We also update our YouTube Channel regularly with new content, see here: Lewis Brownlee YouTube channel

What to do if a P11D goes wrong?

by Nicky Jones | 26 May, 2023 | P11D

What to do if a P11D goes wrong?

If you are an employer in the UK, it is likely that you are familiar with P11D forms. These forms are used to report the value of ‘Benefits in Kind’ provided to employees. So, think company cars, medical insurance, and such like. These will all need reporting and submitting on the appropriate form to HM Revenue & Customs (HMRC) each year.

However, what happens if something goes awry with your P11D submission? Here’s what to do if a P11D goes wrong:

1. Identify the problem:

Before you can fix the issue, you need to know what went wrong. So, bypass the knee-jerk reaction to panic about what to do if a P11D goes wrong by taking some time to proactively understand what the nature of the error is. Mistakes with P11D forms can be anything from incorrect data entry to missing information.

2. Amending the P11D:

HMRC changed the rules around filing and amending P11D forms from 6^th April 2023. HMRC will no longer accept any paper P11D forms, so all submissions must be electronic; this includes both the original submission and any amended Returns.

If you use an accountant, they will be across the process of submitting amended Returns to HMRC and they can deal with this for you.

If you prepare and file your own P11D forms in-house, you’ll need to familiarise yourself with how this is now done – via the post is no longer an option.

You firstly need access to the business’ HMRC government gateway and be able to login. From there, you need to open the PAYE account. You will then see an option (right hand side) to file and/or amend the P11D Returns.

Importantly, whereby you are amending a Return, you must complete the P11D forms in full – you cannot just submit the details that were previously incorrect. The complexity of this process will be subject to the type of benefit(s) offered to employees and the nature of the mistake(s) previously made.

If you are unsure how to approach this or feel out of your depth after looking over the onscreen form, please let us know and we shall be happy to assist.

3. Calculate any additional tax:

If the error on the P11D forms result in an additional tax liability, you will need to calculate the amount owed – HMRC’s software will not calculate this for you.

If you have previously dealt with the P11D process, you should already be aware of how to make a payment to HMRC. For completeness, HMRC’s payment details can be found here: – https://www.gov.uk/pay-class-1a-national-insurance/make-an-online-or-telephone-bank-transfer.

It is important to remember that a payment reference must be included when making payment to HMRC. Each business has a unique reference, and this can be found on HMRC end of year notice to file.

In short…

Mistakes can happen and knowing what to do if a P11D goes wrong can be a challenge. The most important thing to remember is to act quickly to rectify the situation. If you need help preparing or amending your P11D Returns, we would be delighted to offer our assistance.

Call us on 01243 782 423, or email from our contact page and we will be in touch!

We also update our YouTube Channel regularly with new content, see here: Lewis Brownlee YouTube channel

What is the P11d for cars and how do you calculate it?

by Nicky Jones | 12 May, 2023 | P11D

What is the P11d for cars and how do you calculate it?

If you are an employer in the UK and provide company cars to your employees, this post is for you! Indeed, you will likely already be looking at reporting the value of those cars on a P11D and P11D(b) form. After all, the 6th of July submission deadline is just around the corner.

Trust us, we know this can be a complex process. But, understanding the rules and regulations can help you to calculate the correct value. In doing so, they can also help ensure compliance with HM Revenue & Customs (‘HMRC’). So, here goes with our mini-brief on the P11D for cars…

What is the P11D for cars?

The P11D forms are used to report the value of any ‘Benefits in Kind’ provided to employees. This includes the availability of a company car to employees which can be used privately.

How do you calculate the value of a company car?

The value of a company car is based on its list price, including any optional extras, less any capital contribution made by an employee not exceeding £5,000. The assessable benefit is then adjusted based on the car’s emissions.

For cars with no CO2 emissions (fully electric cars) the taxable value is fixed at 2% of the list price.

The taxable value of cars with CO2 emissions between 1g/km and 50g/km is calculated on the car’s CO2 emissions and the pure electric mileage range. Meanwhile, for cars with CO2 emissions of 51g/km or more, the taxable value is calculated as a percentage of the list price based on the car’s CO2 emissions and fuel type.

Neither the P11D nor the P11D(b) shows the personal tax owed. Nor does the company need to calculate this. Once you have calculated the taxable value of the car, the company will need to pay Class 1A NIC on the value of the benefit at 14.53%.

The employee will then pay tax at their marginal rate of income tax (20%, 40%, 45%) based on the benefit(s) received, but they are not subject to a charge to national insurance.

What are the penalties for non-compliance or inaccuracies?

Failure to submit the Returns to HMRC on or before the filing deadline with result in HMRC issuing a penalty. HMRC will charge a penalty of £100 for each 50 employees for each full month that the Returns are late after the deadline.

For inaccurate Returns, HMRC will charge a penalty based on the potential lost revenue. The penalty rate can range from 0% to 100% based on the taxpayer’s behaviour.

In conclusion

Calculating the value of a company car can be a complex process. However, it is important to ensure you remain compliant with HMRC. By understanding the rules and regulations and seeking professional advice, if necessary, you can accurately report the value of company cars and avoid penalties.

Call us on 01243 782 423, or email from our contact page and we will be in touch!

We also update our YouTube Channel regularly with new content, see here: Lewis Brownlee YouTube channel