What is Private Use?

The requirements for a private use deduction are:

  • The employee is required to pay an amount of money for the private use of the car; and
  • The employee actually pays that amount in the same tax year; and
  • The payment is a condition of the car being available for the employee’s private use.

See HMRC article here: EIM25261 - Car benefit calculation Step 8: payments for private use: examples.

It is also worth reviewing the support article related to employees contributing to get a better car, as this is not normally a private use contribution: An employee has made payments towards a better car, is that a Private Use Payment or a Capital Contribution?

Data Entry

There are two places in the system where you can enter information about private use payments for an employee’s car – one is related to the ACTUAL amount that was contributed; one is related to the FORECASTED amount that is expected be contributed.

  • The ACTUAL amount contributed is used by the system for the P11D submission – this is a report of what actually happened during the year.
  • The FORECASTED figure will be used in any P46(car) submission, as these are in-year to pre-warn HMRC.

Adding A New Car

When you add a new car to the system for an employee, if you only enter the ACTUAL amount that is contributed, then nothing related to private use payments is sent along with the P46(car) when sent. If you want to give HMRC the heads-up about expected contributions, you will need to ensure the FORECASTED figure is entered as well.

In general, when adding a car, you would only enter the FORECASTED figure, as the ACTUAL amount contributed will not be known until after year-end. The ACTUAL figure would be entered before submission of the P11D data.

Merging Data

When opening a new tax year, the system will ‘merge’ data through from the previous year. With Private Use Payments, the system will take the ACTUAL amount that was submitted on a P11D and convert that into a FORECASTED figure for the new tax year. It will also remove the actual figure from the allocation, with the expectation of that being entered after year-end.

If you had a FORECASTED figure in the previous year, then the system makes no changes, and the allocation just continues. However, if you only had an ACTUAL amount in for the previous year (for the P11D submission), the system will then send a P46(car) for that vehicle to transmit the FORECASTED amount to HMRC as from 06/04 of the following year.

Entering the ACTUAL figure

This is undertaken on the main car allocation screen, as seen below:

Entering the FORECASTED figure

This would be completed by clicking on the P46(car) button at the bottom of the car allocation screen, and then entering the FORECASTED amount, be that weekly, monthly, quarterly or annually.

Importing Data

If you are importing data to the P11D Organiser, ensure you are importing into the correct area:

  • ACTUAL (for the P11D) is imported as PRIVATEUSE (Amount of Private use contribution made by the employee).
  • FORECASTED (for P46(car)) is imported as PAYMENT for the amount, and FREQUENCY for the expected frequency (a year, a quarter, a month or a week).