P11D Cash Equivalent
Except where specific legislation provides otherwise, the ‘cash equivalent’ value for tax purposes of a benefit provided to a P11D employee is generally the cost to the employer of providing the benefit.
P11D employees are taxed on the cash equivalent of a benefit rather than on its second-hand value. The cash equivalent is broadly defined as the cost to the employer of providing the benefit. Any contribution made by the employee towards the cost is deducted from the cash equivalent.
Note that the basic definition of the cash equivalent of a benefit is overridden in many cases by specific legislation. For example, there are specific rules for calculating the cash equivalent of the benefit where the employee has the use of a company car or is provided with fuel for private use.