Question 1

What is a P11D?

Accepted Answer

A P11D is the form employers use to report taxable benefits in kind, such as company cars, private medical insurance and cheap loans, to HMRC for each employee or director who received them. It must be filed by 6 July following the end of the tax year, and the employee's tax code is then adjusted to collect the tax due. If the employer payrolls benefits instead, no P11D is needed for those benefits.

Question 2

What is a P11D(b)?

Accepted Answer

The P11D(b) is the employer's summary return. It declares the total value of benefits provided across all employees and calculates the employer's Class 1A National Insurance, charged at 15% for 2026/27. It is due by 6 July, with the Class 1A payment due by 22 July (19 July if paying by post). A P11D(b) is still required even when benefits are payrolled.

Question 3

What does benefit in kind (BIK) mean?

Accepted Answer

A benefit in kind is anything of value an employee receives from their job other than cash pay: a company car, employer-paid fuel, private medical cover, an interest-free loan, gym membership. Because it is a reward for work, it is taxed like income. Each benefit has a valuation rule that converts it into a cash-equivalent figure, which is then taxed at the employee's marginal rate.

Question 4

How is company car tax calculated?

Accepted Answer

Multiply the car's list price when new (including VAT and options) by an appropriate percentage based on its CO2 emissions. For 2026/27 a pure electric car is 4%, plug-in hybrids emitting 1 to 50 g/km range from 4% to 16% depending on electric-only range, and petrol cars run from 17% up to a cap of 37%. Non-RDE2 diesels add a 4% supplement. You then pay income tax on that figure at your marginal rate.

Question 5

Do I pay tax on a company van?

Accepted Answer

Only if you use it privately beyond ordinary commuting and insignificant private use. If you do, a flat-rate benefit of £4,170 applies regardless of the van's value, plus £798 if the employer also pays for private fuel. Fully electric vans have a nil benefit, so an electric company van with unrestricted private use currently costs the employee nothing in tax.

Question 6

When does a director's loan become a taxable benefit?

Accepted Answer

When the total loans outstanding exceed £10,000 at any point in the tax year. Once over that threshold, the whole balance (not just the excess) is treated as a beneficial loan, and the taxable benefit is the interest you saved compared with HMRC's official rate, less any interest you actually paid. Overdrawn director's loan accounts are the most common way this catches owner-managers out.

Question 7

What is payrolling benefits, and when does it become mandatory?

Accepted Answer

Payrolling means taxing benefits in real time through the payroll each month instead of reporting them on a P11D after year end, so employees pay the right tax as they go rather than through tax-code adjustments. HMRC has confirmed that payrolling most benefits in kind becomes mandatory from April 2027, so 2026/27 is the last full year employers can rely on the P11D route by default.

P11D & Benefit in Kind Calculator