Q: I’m in the process of starting a new business and want to ensure I’m fully prepared for upcoming compliance changes. I’m aware requirements for reporting benefits in kind (BiKs) are changing, but how will it affect small businesses like mine? Specifically, do I need to report loans or accommodation benefits immediately?
A: There was some news around this topic at the beginning of 2024, with the Government releasing proposals to make it compulsory to do this type of reporting by using software.
The announcement at that time stated employers will be required to report and pay Income Tax and Class 1A NICs on most BiKs in real-time on the ‘Full Payment Submission’.
However, don’t fret; it’s not immediate. The intention was to begin in April 2026, giving everyone some breathing space. But an update from the new Government means that it now looks like there should be a further cushion before compliance becomes strictly enforced. The mandatory use of payroll software will now be phased in from April 2026.
And, pertinent to your question on loans, you won’t have to payroll loans and accommodation at that stage.
For those who want to on a voluntary basis, you’ll be able to report employment-related loans and accommodation through payroll software from April 2026.
As to when payrolling loans becomes mandatory, HMRC had this to say in a December bulletin: ‘no decision has been made as to when we will mandate the reporting of loans and accommodation through payroll software – careful consideration will be given to make sure sufficient notice of any change will be provided.’
In the meantime, if employers do not wish to payroll these, there will be a modified P11D and P11D(b) available.
There is likely to be further news in the new year, with officials promising information on plans to publish draft legislation and technical specifications.