Beyond P11Ds: Preparing for the future of benefits reporting

With the annual P11D filing deadline of 6th July now behind us, many employers will be relieved to have completed another year of benefits reporting. However, while the forms may be submitted, the compliance responsibilities do not end there. For businesses that provide employee benefits, now is the ideal time to review reporting processes, understand any remaining obligations, and prepare for one of the biggest changes to benefits taxation in recent years: mandatory payrolling of Benefits in Kind (BiKs).  

What are benefits in kind? 

BIKs are non-cash benefits provided to employees in addition to salary. Common examples include company cars, fuel benefits, private medical insurance, gym memberships, accommodation and beneficial loans. In most cases, these benefits create a tax liability for the employee and a National Insurance liability for the employer.  

Have you met all of your obligations? 

Submitting P11Ds by 6th July is only part of the annual reporting cycle. Employers must also ensure that for each tax year ending 5th April: 

• 6th July – Provide employees with copies of their P11D information

• 6th July – Submit P11D(b)

• 22nd July – Pay Class 1A National Insurance Contributions electronically (19th July if paying by cheque)

Missing any of these requirements can result in HMRC penalties, interest charges and additional administrative work later in the year.  

Is it time to consider payrolling benefits? 

For many employers, the annual P11D process remains one of the more time-consuming payroll and compliance exercises. Payrolling benefits offers an alternative approach, allowing taxable benefits to be processed through payroll during the year and taxed in real time through PAYE.  

The advantages can be significant: 

• Reduced year-end administration

• Fewer employee tax code adjustments and improved understanding of benefit taxation 

• More accurate tax collection throughout the year 

• Greater transparency for employees regarding the tax they pay on benefits

Where benefits are payrolled correctly, employers generally do not need to submit a P11D for those benefits at year end.  

Not every benefit can be payrolled 

Employers should be aware that some benefits remain outside the standard payrolling regime. 

Currently, employer-provided living accommodation and beneficial loans (interest-free or low-interest loans) still require reporting through a P11D, even where other benefits are being payrolled. These remain key areas where employers must continue to maintain accurate year-end reporting processes.  

Mandatory payrolling is coming 

Perhaps the most important development for employers is HMRC’s move towards mandatory payrolling of Benefits in Kind. 

HMRC has confirmed that mandatory real-time reporting of certain benefits will begin from 6th April 2027, with implementation taking place in phases.  

Phase one – April 2027 

The following benefits will become subject to mandatory payrolling: 

• Company cars 

• Car fuel 

• Vans 

• Van fuel 

• Employer-provided medical benefits, including private medical insurance

Phase two – April 2028 

Most remaining Benefits in Kind will move into the mandatory payrolling regime from April 2028.  

Continuing exceptions 

HMRC has confirmed that beneficial loans and employer-provided accommodation will remain outside the mandatory regime for the time being. 

What should employers be doing now? 

Although the changes are still being phased in, businesses should not wait until 2027 to begin preparing. 

This is an ideal time to review all employee benefits currently provided.

Need advice? 

Our payroll and tax specialists can review your current benefits arrangements, identify opportunities to streamline reporting and help ensure your business remains compliant with all HMRC requirements.