The P11D Organiser has been updated to accommodate the new Optional Remuneration Arrangements (OpRA) legislation.
Have a look at this video for a quick summery of how to enable OpRA....
The 2018 version of the software accommodates the changes brought about by the new Optional Remuneration Arrangements (OpRA) - To enable this particular functionality you will need to edit the properties of the Section F - Company car benefit category to "switch on" this new feature.
1. From the Employer details screen, click the "Benefit Profile" icon
2. Select Section F - Cars and Car Fuel - Main company car and click the EDIT button
3. Select "YES" to the Optional Remuneration Arrangement and click OK to save the setting
Confirm "Yes" to the resulting dialogue box
This will have now set the car records user interface to display the additional fields required for the inclusion of the "cash forgone" values.
Screenshot WITHOUT the OpRA settings applied
Screenshot WITH the OpRA settings applied
As an example, the record below (screenshot 1) shows a "Annual Cash Foregone for Car" value of £12,000. This value is used to compare against the Modified Cash Equivalent (similar to the traditional BIK method of calculation for the company car) which derived an annual value of £10,725 for this particular record - see element D in the graphic below.
Taking into account a value of £12,000 for "Cash Foregone" screenshot 1 below demonstrate a Taxable value of £14788.68 for a record where a £12,000 cash forgone is being used
and screenshot 2 below demonstrates a traditional BIK value of £14459.30 for the same car record where there has been no value for "cash foregone" to be taken into account.
Using the "Show calculations" button will toggle the display of the system's method used to calculate the Taxable BIK value for the company car and fuel benefit.
Further information on the amount to be placed as the annual cash forgone after any reduction permissable under "Connected Benefits" can be found in HMRC's Employment Income Manual EIM44105
An employee sacrifices £6,000 in exchange for the availability of a car and connected benefits. £5,200 is in respect of the availability of the car and £800 is in respect of servicing, vehicle tax, insurance and breakdown recovery.
The modified cash equivalent of the benefit of the car is £5,000.
Comparing the amount foregone with the modified cash equivalent, the relevant amount of the benefit of the car is £5,200. The connected benefits are exempt and the taxable value of those benefits remains nil.
When the connected benefits and their underlying costs have been separately identified then you should use those figures provided they have been worked out on a commercial basis. Where the connected benefits have not been separately identified then you should accept an apportionment on a just and reasonable basis, having regard to the nature of the benefits in question.
Upcoming changes to Optional Remuneration Arrangements rules
Finance (No 3) Bill 2018-19 receiving Royal Assent, which is expected shortly, addresses two anomalies in the April 2017 Optional Remuneration Arrangements (OpRA) rules, by introducing legislation to:
- ensure that when a taxable car or van is provided through OpRA, the amount foregone, which is taken into account in working out the taxable benefit in kind, includes any amount foregone in connection with associated costs (such as insurance and servicing)
- adjust the value of any capital contribution towards a taxable car when the car is made available for only part of the tax year.
The new rules apply from 6 April 2019 and guidance will be updated to reflect these changes.