Tax on company benefits — PMI, cars, loans, and Class 1A NIC
P11D Benefits in Kind Tax Calculator
Common P11D Benefits in Kind
Private medical insurance: Taxed at cost to employer
Company car: Taxed at list price × BiK %, based on CO2 emissions (see our Company Car Tax Calculator)
Interest-free loans over £10,000: Beneficial loan rate 2.5% on balance above £10,000
Accommodation: Taxed at annual value (rateable value or market rent)
Childcare vouchers (legacy): Up to £55/week exempt for basic rate taxpayers
Employer pays Class 1A NIC (13.8% from April 2025) on the total P11D value. Employee pays income tax on the BIK value via PAYE (adjusted tax code) or Self Assessment.
Frequently Asked Questions
What is a P11D?
A P11D is a form employers submit to HMRC to report benefits in kind provided to employees/directors. It lists the annual value of non-cash benefits. Employees pay income tax; employers pay Class 1A NIC.
What benefits must be reported on P11D?
Any benefit with a cash equivalent value not exempt: private medical insurance, company cars, beneficial loans, accommodation, travel expenses above limits. From 2023/24, payrolling benefits is preferred over P11D.
What is payrolling benefits?
Instead of submitting P11D forms, employers can include benefits values in payroll each month. Employees pay tax in real-time rather than through a retrospective tax code adjustment. Mandatory from April 2026 for most benefits.
What P11D benefits are tax-exempt?
Employer pension contributions, cycle-to-work (up to £1,000 worth), workplace parking, annual staff party (up to £150/year), long service awards (up to £50/year of service), trivial benefits (up to £50), and mobile phones (1 per employee).
What is the beneficial loan rate for P11D?
2.5% (official rate from 2021/22, unchanged to date). Loans above £10,000 create a taxable benefit equal to: outstanding balance × 2.5%. Below £10,000 is fully exempt.
How does private health insurance affect my tax?
The premium your employer pays is reported on P11D. You pay income tax on that amount at your marginal rate. Example: £2,000 premium × 40% tax = £800 extra income tax per year.
What is the Class 1A NIC rate for employers?
13.8% on the total P11D value (increased from 13.8% — the employer NIC rate went to 15% from April 2025 for employer NIC on pay, but Class 1A on benefits remains 13.8% unless changed by legislation).
When do P11D forms need to be submitted?
P11D forms (and the P11D(b) summary) must be submitted by 6 July following the end of the tax year. Class 1A NIC must be paid by 19 July (22 July electronically).
Can I salary sacrifice to avoid P11D benefits tax?
Salary sacrifice for many benefits (excluding pension, cycle-to-work) lost its NIC advantage from April 2017. Cars, accommodation, and school fees via salary sacrifice are now taxed on the higher of salary foregone or BIK value.
What happens if an employer fails to submit P11D?
Late filing penalties: £100/month per 50 employees. Failure to pay Class 1A NIC on time: 5% surcharge after 30 days. HMRC can also assess employees for unpaid tax on unreported benefits.
Are company mobile phones a P11D benefit?
One mobile phone per employee is fully exempt. Additional phones or tablets used privately may attract a P11D charge. Laptops used wholly or mainly for work are exempt; those used privately are not.
How are electric company cars treated for P11D?
Electric vehicles have a very low BIK rate: 2% of list price in 2025/26 and 2026/27. This makes EVs extremely tax-efficient as company cars. A £50,000 EV has a taxable benefit of only £1,000 — income tax cost of £400/year for a 40% taxpayer.