P11d and cash equivalent for car - anyone tax experts

[Reallyneedsomejustice]

Hi green lease deal salary sacrifice. Car £78900 new. Work put in 14% category for Volvo xc 90 plug in hybrid in 2023 for CO2 emissions and mileage on electric . Understand BIK would be about £4,400 per year. 78900 x 14% x 40% BIK. Paying lease deal over 4 years. What goes on cash equivalent in P11d form? Any tax experts? I paid about £1250 to cost of it each month. I want to make sure I’m not overpaying tax. HMRC thought I was too but told me to go back to employer to check P11d form was correct. Any tax experts out there?

AFAI recall the P11D (expenses and benefits) includes the list price of the car including extras/accessories, the CO2 emissions and the cash equivalent value. If the CO2 emissions of your car put it in the 14% bracket then the cash equivalent value is £78,900 X 14% = £11,046.

That then gets added to the cash value of other benefits to give a total value for benefits, and is used to calculate employers NI due and feeds into your tax computation to determine the tax liability.

It’s biazarre. It supposed to be salary sacrifice car add then they add the monetary value to your benefits so you lose personal allowance? Does thst mean car green lease deals are double taxable ie BIK and loss of PA? It doesn’t make sense when the employee is actually paying for the car?

Your P11D/list price X relevant rate (14% in this case) in your cash/cash equivalent - P11D of £11,046.
You will be taxed on this at your marginal rate so 40%.

If your car is salary sacrifice and you pay for it every month you basically pay for the car, and then you don't pay tax/NIC on the amount sacrificed.
You still have the P11D/BIK value which should be taxed via your PAYE code monthly/weekly.

Salary sacrifice cars only really make sense if they are EVs, when the BIK % is much lower -2 or 3%. But it’s not really double taxed if you look at it in the same way as a car allowance. You either take the allowance and pay tax, or take a car, lose the allowance and pay BIK. You are just trading income before tax for a car/insurance/maintenance, and paying BIK.

Cash equivalent is only relevant for cars >75g/km which are subject to optional remuneration (OpRA) rules. OpRA means that you are taxed on the worst case scenario of cash equivalent vs car tax. However If <75g/km which I expect a PHEV is then your BIK calculation is correct (assuming you’ve used correct % for your emissions etc).

If youre not sure though I’d really recommend getting advice from an accountant with access to all your car details.

You really want to be choosing a car with over 70 electric miles to be in the 5% range or better to see the real benefits of the company car.

Your thoughts about being “double taxed” may be coming from one of 2 places:
Either your BIK is actually pushing your total taxable income into the £100k–£125k band and you have started to lose your personal allowance or
your tax code may simply have been changed by HMRC to collect the BIK tax through PAYE, making it look like you have less personal allowance – but that just a "payment plan" and if your total taxable income including BIK is below £100k you haven't lost any personal allowance yet.

my old work came back saying they didn’t put any mileage in the P11d. CO2 is below 50 and they should have put in a range of 30-39 miles which would be in 12% BIK. They put cash equivalent as £10,353. Dos this have any tax implications? I had a salary between 108000-111000. Monthly pay was £9400’and I was taking home £3200 a month which seems a helluva lot of tax to me??

the green lease deal I pay the lease deal that comes out of payroll so not sure if that is regarded as option remuneration?

The cash equivalent on the P11d is just the taxable value of the car benefit (the BIK figure). That’s the amount HMRC add to your income for tax purposes.

But £10,353 doesn’t really make sense if the list price was £78,900 - at 12% its £9,468 and at 14% its £11,046
On the income side, your taxable income should be around £102k (£108,000 - 15,000 SS +- 9,468 BIK) and tax on that should be approx £32k (28,913 income tax + 3,871 NI) so your take-home pay looks way too low at it should be closer to £60k (108000-15000-32783).

So I'd go back to payroll and question the BIK cash equiv and also how your tax code was adjusted during the year.

Yes I spoke to tax man and he agreed I’d been overpaying but had to go to old employer to get them to correct the P11d. At least my old employer is looking into it. I think they have made a mistake. I’ve written to tax man as well but the rules are not fully clear of what goes where on the P11. Fingers crossed as I felt my take him reduced by too much!. It’s a worry if a dept dedicated to P11 doesnt get it correct!

HR botched up! Lots of tax back before Christmas! My old employer used vendors! Think I need to get a professional to check everything!!