Driving away the P11D painby
The process of reporting company car benefits on the annual P11D forms is always a pain, but this year the new company car rules create a bigger headache than usual.
Company cars are doubly difficult this year as there are two car benefit tables to juggle. To determine which table of appropriate percentages of list price you need to use for which car, you need to know when the vehicle was first registered, ie before 6 April 2020, or on or after that date.
This parallel system has resulted from the switch of the method used to determine the vehicle’s CO2 emissions from the New European Driving Cycle (NEDC) to the Worldwide Harmonised Light Vehicle Test Procedure (WLTP), which happened on 6 April 2020. The WLTP figures tend to be higher so the appropriate percentage of list price has been set lower than those emissions determined by NEDC. The two tables of appropriate percentages will be harmonised from 6 April 2022, so we only have a duplication for two years.
The exact registration date of the vehicle is irrelevant. All the law needs is whether it is before or after 6 April 2020, but the P11D form requires an exact date to be inserted. The registration date can be found on the car’s “log book” or registration certificate issued by the DVLA.
Level of CO2 emissions
For all company cars you need to know the CO2 emissions figure to the nearest 5g/km. This figure is given on the Certificate of Conformity (CoC) issued with new cars, and also on the registration certificate.
Where the CO2 emissions figure is between 1 and 50g/km, the car is a hybrid model, powered by both electricity and petrol or diesel. In this case you also need to know the number of miles the vehicle can travel on a single electricity charge - its zero emissions mileage. This figure should also be given on the CoC for the vehicle.
Electric cars obviously do not have a CO2 emissions figure, so you need to enter “zero” to answer the CO2 emissions question on the P11D.
For the 2020/21 tax year the appropriate percentage of the list price for electric cars is zero, which means the taxable benefit is also zero. However, the provision of the electric car does need to be reported on the P11D. In 2021/22 the appropriate percentage for electric cars will be 1%, so HMRC needs to know that an electric car has been provided to estimate the taxable benefit for current year, and include that within the employee’s PAYE code.
Finally, you need to know the vehicle’s list price. This is not given on the registration certificate, but it may be on the order document for the new car.
AccountingWEB member Constantly Confused professed to tearing his hair out each year trying to find the list price for his clients’ company cars, who provide only the vaguest indication of the make and model. If you have the car’s registration you can use the DVLA’s check if a vehicle is taxed service to discover the vehicle’s details. This still doesn’t give you this list price, but at least you’ll have the model details to search through online guides.
Where the car is a “classic car” you also need to know its current market value. A classic car is defined as one that is 15 years old or more and worth at least £15,000. If the market value of a classic car exceeds its list price you must use the market value in place of the list price – as adjusted for any capital contributions made by the employee and accessories added to the vehicle.
A company car is not a van, but a van may sometimes be redefined as a company car.
The provision of a company car should be reported on the form P46(Car) after the end of the quarter in which a car is first provided to that employee. Vans which are now defined as cars should be reported on the P46(car), as well as on the P11D at the end of the year. A company van should not be reported on the P46(car) if it is not a car.
You do need to know whether there is any private use of the van to report on the P11D. Ordinary commuting in a company van (ie travelling from the employee’s home to work sites) does not count as private use, but using the van for a fishing trip at the weekend does amount to private use.
As with cars its an all or nothing private use test – the smallest amount of private use creates a taxable benefit for the portion of the year the van is available to the employee, although the benefit is only £3,490 for 2020/21 (£2,792 for electric vans). In 2021/22 the taxable benefit of having an electric van is zero.