What Is The P11D Value?
What is the P11D Value?
If you have a company car, you know how much of a blessing it can be. In fact, the opportunity to have a company car might be a deciding factor when you’re choosing a job.
If you have a company car that’s also your personal car, you have to pay Benefit-In-Kind tax. This is because the HM Revenue and Customs see the use of a personal car as a taxable luxury.
P11D value is the overall list price of your company car. It’s used to calculate the percentage that the driver will pay as Benefit-In-Kind (BIK) tax.
The P11D value stays the same throughout the lifespan of the car, thus making it different from the On-The-Road value of the car. Ultimately, it’s the list price of the car with any options you might have added.
How is P11D Calculated?
The way P11D is calculated can get complicated. One of the largest factors in company car tax is CO2 emissions. The higher the CO2 the larger the percentage to pay. But there’s more to it than CO2 emissions.
These factors are used to determine the overall P11D price of the car:
- The cost of the car
- Any added options over £100
- Car delivery costs
Once you have all these costs, add them together and work out the percentage determined by the CO2 levels of the car. It’s important to calculate how much BIK you need to pay before picking your company car.
How does P11D impact Benefit-In-Kind tax?
The P11D value of the car is how HM Revenue and Custom work out the amount of BIK tax you’re going to pay. The lower your P11D value and CO2 emissions, the less BIK tax you pay. It’s important to figure this out before you choose your company car because the price of this tax can add up, especially if you want to add extras to your car.
Bear in mind, diesel cars have an extra 3% BIK tax in comparison to petrol cars. So fuel type is another thing to consider.
BIK tax is deducted from your salary, so make sure you can afford the monthly payments on top of your other obligations.
Despite BIK tax, there are many perks of having a company car. The BIK tax is a small percentage of what the car would cost if you were buying it with your own money, so you might be able to drive a car that you wouldn’t usually be able to afford.
Find Your Perfect Lease Deal