Q: My business has always used P11D forms for reporting benefits-in-kind. We don’t payroll benefits currently. But I’ve heard the rules are changing. What does this mean for my business and what do I need to do to prepare?
A:You’re absolutely right, HMRC has confirmed that from April 2026, the requirement to submit P11D forms will be withdrawn. Instead, all reporting of benefits and expenses provided to employees will need to be done via payrolling in real time.
So, what does this mean for your business? In short, it marks the end of the annual P11D ritual. Rather than waiting until the end of the tax year to report benefits, employers will need to process these through payroll on a monthly basis, ensuring tax is collected as the benefits are provided.
For those already payrolling benefits, there’s not much change – just a simplification ahead. However, in your case, as you’re still using P11Ds, it’s time to begin preparing for a shift in your internal processes. Here’s what you should be thinking about now:
- Review your current benefits: make a list of all benefits you currently report via P11D (e.g. company cars, private medical insurance).
- Consider payrolling early: you don’t have to wait until 2026. HMRC already allows voluntary payrolling, and many employers are making the switch ahead of the deadline to smooth the transition.
- Check your payroll software: make sure it can handle benefit processing correctly and provide the necessary employee breakdowns.
- Communicate with your employees: when you move to payrolling, employees need to understand that the tax on their benefits will now be collected in real time via PAYE, rather than showing up in a later tax code adjustment.
- Speak to us: this is a key change, and professional advice from our team can ensure a compliant and hassle-free implementation.
In many ways, this change should simplify year-end reporting, but like all transitions, a bit of early planning will go a long way.
If you’d like to discuss how your business can get ahead of the curve, we’re here to help.