What is the P11D value of a car?

When choosing a company car, the key figure you will need to consider is the P11D value of a car. This differs from the OTR (on-the-road) you will see in most brochure advertisements, and is important, as it is used to calculate the value of a car’s benefit in kind (BiK) of company, as well as its CO2 emissions figure, determining the amount of tax you will pay annually.

But what exactly is the P11D value of a car? In this guide, we’ll explain exactly how a car’s P11D value is calculated, how you can check it, and what it means for your annual company car tax bill.

What is the P11D value of a car?

A car’s P11D value is made up of a car’s full list price, including any specified optional extras such as alloy wheels, paint, upgraded upholstery or any technology upgrades. VAT and any additional costs such as delivery costs are also included in this figure. Yet, unlike typical manufacturer’s recommended road prices (ROTR), a car’s P11D value excludes first-year registration fees and vehicle tax.

This figure is important for companies when looking to place company car orders. When a company comes to buy or sell a car, the employer is required to complete a Form P11D which determines the value of the benefit in kind (BiK) of the car, including any extras or modifications that may have been added. This is then sent to HMRC so that they can calculate the amount of tax you will have to pay each year on your company car.

To keep tax bills as low as possible, we advise you to choose a newer car with a low P11D value and a low company car tax bracket.

What is the impact of the P11D value on company car tax?

Once the P11D value of a car is confirmed, this value is then used to determine the taxable amount of the benefit in kind (BiK), which is the amount you will be taxed on annually. For new cars or those registered after January 1, 1998, you need to know the CO2 emissions figure, as this determines the company car tax band for your car.

Company car tax brackets range from 1% to 37%, with zero-emission models being in the lower brackets, while higher-emission models are towards the top. To calculate the BiK amount, you divide the P11D value of a car by the tax band percentage your car is in, giving you the resulting BiK figure that is subject to tax.

To give you an example, we’ll use the BMW 318i M Sport sedan. This model has a P11D value of £35,000 and a CO2 emissions figure of 154g/km. This puts it in the 35% bracket (£35,000 x 0.35%), resulting in a BiK amount of £12,250. This means that at the 20% tax rate the annual bill would be £2,450, rising to £4,900 at the 40% rate and £5,512 at the higher 45% rate.

Knowing a car’s P11D value and calculating your company’s car tax is a great way to budget and see if a car is right for you. To help you determine your company car tax liability, HMRC has an online company car tax calculator which you can find here.

How to Calculate the P11D Value of Vintage and Used Cars

Things are slightly different for cars that are 15 years or older. Vintage or classic vehicles are still valued through the P11D system, but their value is determined by looking at the reasonable value at which the manufacturer, importer or distributor should have sold the car – only if there is no list price available.

How much you pay in taxes is then determined based on the car’s engine size, with buyers paying a percentage per year of the car’s P11D value based on engine size. Cars with engines from 0 to 1400cc are taxed at 15% of their value, while cars from 1401 to 2000cc and over 2000cc pay 22% and 32% respectively. Therefore, company car buyers who are looking for older cars are recommended to stick with those with smaller engines to avoid a spike in additional costs.

One thing to bear in mind, however, is that the percentage is only applied to the P11D value of a classic car if it is over £15,000; if the value is quoted as below, the percentage will instead be applied to the original list price of the vehicle.

Want to turn heads in the corporate car park? Check out our list of the 10 best company cars

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