Last updated January 20, 2022
P11D value is a term to describe a company car’s value – it may be confused with the P11D form, but it’s an entirely different entity. The P11D value comprises the car’s list price (including VAT) and any delivery charges but excludes the first registration fee and road tax.
Ascertaining the company car’s P11D value enables you to calculate your annual company car tax. You can do this by multiplying the P11D value by the percentage rate of your income tax bracket and the car’s benefit-in-kind (BIK) tax band, which is determined by a car’s CO2 emissions on models registered since 1st January 1998 (current rates can be found here).
There are two ways to reduce your company car tax:
Both options will lower your BIK amount, and therefore your company car tax.
P11D value is a tool that aids the calculation of company car tax, but people often erroneously assume it’s a component of the P11D form.
HMRC requires employers to complete a P11D form to prevent companies or employees from circumventing the tax system via BIK – such as company cars. The completed P11D form will include the cash equivalent of any BIK or expenses paid to directors or employees over the preceding tax year. Note that despite containing information about the list price and other details of company car ownership or use, the P11D form is not directly linked to P11D value.
The P11D value calculation applies to both new and used cars. Therefore, if you’re considering a used company car, the P11D value and tax will still be based on the new list price.
If there is no list price available to reference, a notional price is used – this is a reasonable value the manufacturer, importer or distributor would have expected to recoup for the car.
For P11D value purposes, the UK government defines a classic car as one 15 years old or more at the end of the current tax year. Its market value must also be greater than its original list price. Company car tax for used or classic cars is determined via three tax bands based on engine size:
If the car’s market value exceeds £15,000, the percentage is applied to that figure. If the market value is under £15,000, the percentage is applied to the car’s new list price.