The purpose of the legislation is to stop employees from avoiding tax and NI deductions that would be due on the amount of pay or allowance that is given up (known as "cash foregone"), if this is more than the taxable value of the benefit they receive instead.

You can read more about OpRA on the government's website.

Fields have been added to the P11D module in the software to allow you to account for the foregone amounts.

Where do I enter the amount foregone?

When you enter employee benefit details you now have a Foregone field that you can enter the figure against. Read more >

For a company car there are Car foregone and Fuel forgone fields; for beneficial loans you have a Loan Foregone field; vans have both Van Foregone and Van Fuel Foregone fields.

Car foregone and CO2 emissions

Cash foregone does not apply to company cars with CO2 emissions below 75g/km under current legislation. You can still enter the amount as normal, but it will be ignored for the purpose of the calculation.

Benefit in Kind (BiK) payments

Cash foregone amounts affect the P11D cost of providing the benefit, so will also affect the Benefit in Kind payment calculation. This is still the case if you enter a cash foregone amount part way through the tax year. If the cash foregone amount would increase the benefit cost, the BiK payment will automatically be adjusted the next time you run the Benefit in Kind calculation. This may result in a sharp increase in the taxable pay, particularly if the amount is entered towards the end of the tax year.

Company car examples

1. An employee has a choice of a company car or an additional car allowance payment of £5000 per year. The employee chooses a company car with a taxable value of £3500 per year and CO2 emissions of 130g/km. When setting up the benefit you would enter a Car foregone amount of £5000. The calculation will use the £5000 Car foregone value as this is greater.

2. An employee has a choice of a company car or an additional car allowance payment of £5000 per year. The employee chooses a company car with a taxable value of £3500 per year and CO2 emissions of 60g/km. When setting up the benefit you would enter a Car foregone amount of £5000. The calculation will ignore the Car foregone amount and use the £3500 value as the CO2 emissions are below 75g/km.

3. An employee has a choice of a company car or an additional car allowance payment of £2000 per year. The employee chooses a company car with a taxable value of £3500 per year and CO2 emissions of 130g/km. When setting up the benefit you would enter a Car foregone amount of £2000. The calculation will use the £3500 value as this is greater.

Benefit in Kind payments for customers that do not use the P11D module

If you don't use the P11D module, but are processing BiK payments, you will need to calculate yourself whether the cash foregone is higher than the taxable value of the benefit, and if it is, enter the cash foregone amount rather than the benefit cost. This is because the cash foregone fields are only available in the P11D module.