P11D Value
P11D value assists the calculation of company car tax and is comprised of the list price of a vehicle (including VAT) and vehicle delivery charges, but excludes first registration and annual road tax.
What is P11D Value and how do you calculate it?
P11D value assists the calculation of company car tax and is comprised of the list price of a vehicle (including VAT) and vehicle delivery charges, but excludes first registration and annual road tax. Although it is often confused with the P11D form, P11D value is an entirely different entity.
P11D value differs to the actual road price of a vehicle as is visible from the example scenario below
-
Vehicle Road Price = £15,999
-
Vehicle List Price = £14,700 inc. VAT
-
Vehicle Delivery Price = £650
-
Annual Road Tax = £145
-
Frist Registration Fee = £55
P11D Value = £15,350 (Vehicle list price + delivery price)
P11D value vs P11D form – what’s the difference?
Although P11D value is a tool which aids the calculation of company car tax, people often wrongly assume it is a component of the P11D form.
A P11D form is the document HMRC require employers to complete and submit detailing the cash equivalent of any benefit in kind or expenses which have been paid out to directors or employees over the course of the preceding tax year.
While the P11D form does include information about the list price and other details of company car ownership or use, it is not linked directly to P11D value.
What is the purpose of P11D value?
P11D value is used in a calculation to determine the annual company car tax due for payment on business vehicles.
Using the calculations above, you can easily discover a vehicles P11D value and in turn work out your company car tax price.
Company car tax is worked out by multiplying your P11D value by the CO2 emission tax band percentage of the vehicle, of which the current and projected rates can be found here.
The figure you are left with is your benefit in kind (BIK) amount and should subsequently be multiplied by your income tax rate percentage. The current tax rates can be seen in the table below:
|
Rate |
Income |
|
Basic Rate 20% |
£11,851-£46,350 |
|
Higher Rate 40% |
£46,351-£150,000 |
|
Additional Rate 45% |
Over £150,000 |
So, in a scenario where your company car’s emissions fall within the 110-114 bracket (21% CO2 based tax band) and your salary is between £11,851 - £46,350 (20% basic income tax rate), using the P11D value of £15,350 from earlier in the article; your company car tax would be £644.70.
You can see how this is broken down below.
P11D VALUE x CO2 BASED TAX BAND = BIK AMOUNT
£15,350 .00 x 21% = £3,223.50
BIK AMOUNT x INCOME TAX RATE = COMPANY CAR TAX AMOUNT
£3,223.50 x 20% = £644.70
In order to reduce the amount of company car tax you pay, you can either opt for a car with a lower P11D value, or choose a lower emissions vehicle which will lessen the CO2 based tax band percentage.
Both options will help to lower your BIK amount, and therefore your company car tax amount.
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