IT’S a common enough question asked by company car drivers – just what is meant by the P11D value of the car?
Basically, the P11D value is the list price of the car, plus the cost of any options that gave been added, plus the delivery charges.
Take a look at that sentence carefully – what it means is that it doesn’t matter if you get a great deal with thousands knocked off the price of the car, the P11D stays the same.
The P11D value is fixed for the life of the car, irrespective of any later price increases.
Why is the P11D value so important to company car drivers?
The reason is that the P11D value of the car is used to determine the amount of company car tax you will pay, in combination with the car’s CO2 emissions.
The level of CO2 emissions dictates the percentage of the P11D value of the car upon which you’ll be taxed – the ‘benefit in kind’ (check out the example below) – the lower the P11D value, and the lower the CO2 emissions, the less company car tax is payable.
Calculating your company car P11D value
Here’s an example taking in one of our long term cars – the Audi Q7 3.0 TDI quattro S Line tiptronic.
- P11D value: £53,300
- CO2 emissions: 150g/km
- Company car tax band 2017/17: 32%
- Benefit in kind: 32% of £53,300 = £17,056
- Company car tax payable 20%/40% of £17,056: £3,411/£6,822
How do added options affect the P11D value? Take the Audi again:
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- Basic P11D value: £53,300
- CO2 emissions: 150g/km
- Company car tax band 2017/18: 32%
- Option price: Panoramic glass sunroof £1,700, Audi side assist including Pre-sense rear and exit warning £750, Dynamic pack £2,655 and Parking assist pack £1,150
- P11D value including options: £59,555
- Benefit in kind: £19,057
- Company car tax payable 20%/40%: £3,811/7,623
The P11D increases and therefore so does the benefit in kind value of the company car – which means more company car tax is payable.
So when choosing options you always have to be aware how they can affect the P11D value and ultimately the amount of company car tax you pay.
It’s not all bad though! You might have to pay more company car tax but the car you are driving is more comfortable and more personalised to your tastes!
But you don’t have to pay for all the options you might want to add.
You can add telephone or telephone wiring without paying any tax penalty as this is not a taxable item. This has no effect on the car’s P11D for company car tax purposes.
