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.

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