P11D: a taxing issue?

The P11D value of a car will help shape an employee’s tax contributions and is an important consideration for fleets.

By law, at the end of each tax year you must give Her Majesty’s Revenue and Customs (HMRC) particulars of any expenses payments, benefits and facilities provided to:

• each employee or director earning at a rate of £8,500 a year or more, and

• each director earning at a rate of less than £8,500 a year, unless they are

- a full time working director with no material interest in the company, or

- a director of a charity or non-profit making concern.

As a result the P11D form should include details of cars made available for private use and the total car benefit charge.

The list price of a car will usually be the UK list price of the car on the day before the date of first registration, including VAT, car tax (where appropriate), delivery charges and number plates.

If the car had no list price when it was first registered, use the notional price. This is the price that might reasonably expected to be the car’s list price if its manufacturer, importer or distributor had published a list price for an equivalent car for single retail in the UK.

Accessories must be added at their list price, including VAT, fitting and delivery charges.

Capital contributions (payments made by the director/employee towards the cost of the car and accessories) are deducted from the price of the car and accessories (maximum deduction £5,000).

The price of the car and accessories, less any capital contributions, is limited to £80,000.

This figure is multiplied by the ‘appropriate percentage’ to give the car benefit charge for a full tax year. The appropriate percentage for cars registered on or after January 1, 1998 depends on the carbon dioxide (CO2) emissions of the car and the type of fuel used.

For further information of P11D, visit Her Majesty’s Revenue and Customs (HMRC).