Company cars, medical cover and the P11D: UK benefits on a US tax return

Figures relate to tax year 2025-26 (UK) / 2025 (US)

A company car, private medical cover, a gym membership: British employers call these benefits in kind, value them by formula, and report them on a P11D. The figures look official, which is why Americans tend to copy them straight onto a US return.

That copy is almost always wrong. America values the same benefits differently, exempts some that Britain taxes, and taxes others Britain leaves alone. So this guide explains how each perk crosses the Atlantic.

Key takeaways

• Britain values most benefits by formula and reports them on a P11D each July.
• America taxes the actual value of what you received, which rarely matches.
• Employer-provided medical cover is often excluded in America, unlike Britain.
• Company car benefit is taxable in both, but computed on different bases.
• Benefits count as earned income, so the exclusion can cover them.

What is a benefit in kind?

A benefit in kind is something your employer gives you instead of cash. Britain taxes most of them through a set of valuation rules rather than the actual cost. Per the GOV.UK guidance on company benefits (opens in a new tab), the employer reports the figures and employees pay tax on them.

Employers report on form P11D after the tax year ends, or payroll the benefits during the year. Either way you receive a statement showing each benefit and its taxable value. Employer National Insurance applies on top, which is the employer's cost rather than yours.

Britain taxes a formula. America taxes the thing itself. The two numbers almost never agree.

How does America treat the same perks?

As compensation, unless a specific exemption applies. The starting point is that anything of value from your employer counts as wages. American exemptions then carve out particular items, and the list differs sharply from the British one.

Valuation differs too. Where Britain applies a percentage to a car's list price, America looks at the value of your actual personal use. Two systems, two numbers, from one set of keys.

That difference means you cannot simply convert the P11D total into dollars. The British figure is a statutory measure, not a market one. Treat it as a label, not a value.

Why is medical cover the big exception?

Because the two countries take opposite views. Britain treats employer-paid private medical insurance as a taxable benefit. America generally excludes employer-provided health coverage from income altogether, one of the largest exclusions it offers.

So a benefit that costs you UK tax may cost nothing in America. The analysis depends on the scheme wording, so confirm the exclusion rather than assuming it for an unusual arrangement. That is worth checking early.

The mismatch runs the other way as well. A cycle to work scheme is exempt in Britain and generally taxable in America, though the sums involved are far smaller.

How is the company car handled?

Separately in each country, and the gap can be wide. Britain multiplies the list price by a percentage set by emissions, which is why electric cars carry such low charges at the moment. Fuel provided for private use adds a second charge.

America ignores all of that and asks what your personal use was worth. Standard valuation methods exist, usually based on an annual lease value and the proportion of private mileage. Keeping a mileage record is the only way to support the figure. A phone app is fine for the log.

An electric car shows the difference plainly. The British charge may be trivial while the American one reflects real use, so the same car produces very different numbers on the two returns.

Do benefits count for the exclusion?

Yes. Non-cash compensation for work performed abroad is still foreign earned income, so the exclusion can cover it alongside your salary. The value simply counts toward the same limit, which is $130,000 for 2025.

Housing provided by an employer has its own treatment, and can interact with the housing exclusion. Our guide to Form 2555 and the exclusion sets out how the limit works in practice.

Where you use the foreign tax credit instead, the UK tax paid on benefits is creditable in the normal way. The mismatch in values means the credit rarely lines up neatly. That is normal rather than an error.

How do you report them properly?

Start from the P11D but never stop there, because it answers a British question rather than an American one. Benefits in kind need rebuilding under US rules before they reach your return. These steps produce figures both authorities will accept:

1. Collect the P11D or payrolled benefits statement for the UK tax year.
2. List each benefit separately rather than using the total.
3. Remove items America excludes, such as employer health cover.
4. Value the remaining benefits under US rules, not the British formula.
5. Apportion across the calendar year, since the tax years differ.
6. Convert each figure to dollars using rates for the right period.
7. Keep mileage records and scheme documents with your tax file.

The apportionment step catches people out. A P11D covers April to April, while your US return covers January to December, so a single car benefit spans two American returns.

Which benefits in kind cause the most trouble?

Cars and accommodation, followed by relocation packages. Each is valued differently in the two countries, and each involves enough money for the difference to matter. Relocation is the one most people miss entirely. Ask about relocation early.

Britain exempts up to £8,000 of qualifying relocation costs. America removed its equivalent exclusion in 2018, so employer-paid moving costs are simply wages there. A generous relocation package can therefore produce a US bill in your very first year. Check the package breakdown before you accept it.

Employer loans follow a similar pattern. Both countries tax the benefit of cheap credit, but they measure it against different official rates. Check the official rate.

Accommodation provided by an employer

Employer-provided housing is taxable in Britain unless narrow conditions apply. America taxes it too, with its own narrow exemptions for housing on business premises provided for the employer's convenience.

Americans abroad have a further option. The foreign housing exclusion can cover part of employer-provided or reimbursed housing costs, above a base amount and subject to a cap that varies by location.

That exclusion sits alongside the main one and draws on the same income. Model them together rather than separately. Model them together.

A worked example

Take an illustrative example. An American in Manchester receives private medical cover worth £1,800 a year and an electric company car with a British taxable value of £900.

On her UK return both figures are taxable, adding £2,700 to her income. On her US return America generally excludes the medical cover, and values the car on actual personal use, which comes to roughly £3,400 equivalent.

So her American taxable benefits exceed her British ones, despite the exclusion. Copying the P11D across would have understated one figure and overstated the other.

What about salary sacrifice?

It complicates both sides. Giving up salary for a benefit reduces your UK taxable pay, and for some benefits that saving holds up. America looks through the arrangement and taxes the value of what you received instead.

Pension sacrifice is the important exception. Employer contributions to a UK workplace pension carry treaty protection within limits, which is why sacrificing salary into a pension usually works well for Americans while sacrificing it for a car does not.

What happens when you leave the job?

Benefits in kind stop, but the reporting does not. Your employer issues a final P11D covering the part-year, and the values are apportioned to the date each benefit ended. The final year is usually the messiest one of all.

Check that the car and medical cover come off on the right dates. Payroll teams often report a full year by default, which leaves you taxed on months you never had.

Termination packages raise their own questions. Our guide to redundancy pay and US tax covers what happens when the job ends rather than the benefit.

Mistakes and traps with benefits in kind

Most of these come from treating the P11D as a finished answer. Each appears regularly in returns we review:

• Copying the P11D total straight onto the US return.
• Taxing employer medical cover in America when it is usually excluded.
• Using the British car formula instead of a US valuation.
• Ignoring the April to December mismatch between the tax years.
• Forgetting that benefits count toward the exclusion limit.
• Keeping no mileage record to support the personal use figure.

Share awards are a separate subject again, with their own sourcing rules. Our guide to share schemes across two countries covers those.

What should you ask your employer for?

Ask for the underlying cost, not just the reported value. For medical cover that means the premium paid for you. For a car it means the list price, the lease cost and the dates you held it.

Ask for the dates too, because benefits often start or stop mid-year and the dates drive the apportionment. Most payroll teams hold all of it in one report. Payroll can usually confirm both in one email.

Payroll teams supply these figures readily when asked in advance. Requesting them in the following April, when the P11D lands, usually means waiting until someone has time. Ask in March.

How US UK Tax Accountants helps

We split the P11D into its parts, apply the American rules to each one, and apportion the figures across the right periods. Our US federal returns service covers employment benefits alongside salary and any equity.

In our practice the medical cover question alone often changes the bill. We agree a fixed fee in writing before any work begins.

Check your P11D before filing

If your package includes a car, medical cover or other perks, a short review shows what actually belongs on your US return. Send us the P11D and your payslips. You can book a consultation and hear back within one working day.

Last reviewed 17 September 2026 by the US UK Tax Accountants Tax Team. This article is general information, not personal tax advice — speak to a qualified US/UK tax adviser about your own position.