As it stands, employers must submit P11D forms to HMRC at the end of each tax year, to report the value of certain employee benefits, such as company cars or private medical insurance.
Additionally, a P11D(b) should be completed to declare the amount of Class 1A National Insurance (NI) contributions you’re due to pay for the year.
The deadline for submitting P11Ds and P11D(b)s to HMRC is 6 July following the tax year. You must give a copy of each employee’s P11D, or the information it contains, to the employee by the same date. There are penalties for submitting late or incorrect forms.
Currently
Employees pay their Income Tax due, as calculated from the information on their P11D, either through self-assessment or collection by HMRC in relation to their PAYE code.
Certain benefits-in-kind can be taxed through PAYE, or ‘payrolled.’ Some businesses choose this method to reduce their reporting burden. To do this, you must register your intention before the start of the tax year.
Even if an employee’s benefits are taxed through PAYE, they still need to submit a P11D(b) for Class 1 National Insurance Contributions (NICs).
Employers must pay Class 1A NICs on the value of all benefits provided to HMRC by 19 July following the end of the tax year, or 22 July should they make the payment online.
The changes
From April 2026, reporting and paying Income Tax and Class 1A NICs on benefits-in-kind will be mandatory through payroll software.
The government aims to reduce administrative burdens by simplifying and digitising existing processes, where they anticipate 4 million less P11D and P11D(b) forms will be required.
Tax on employment benefits will be collected in real time, not through tax codes in arrears. Additionally, Class 1A National Insurance contributions will be collected in real time for each pay period, rather than at the end of the year using a P11D(b) form.
Currently, it’s unknown whether the due date for paying Class 1A NIC will change.
Have you considered…?
You may wish to consider some of the factors below to prepare for the upcoming changes…
- Whilst you may once have been able to exclude specific benefits and employees from your payroll, what will the new requirements (to include all employees and benefits) mean for your business?
- Do your current systems hold sufficient data to report the relevant, monthly payroll information? How organised and efficient are your systems?
- How can you ensure you remain compliant when payrolling becomes mandatory to avoid the increased risk of potential penalties?
Need some assistance?
If you would like some assistance with any of the topics covered in this article, please contact us and member of our team will be happy to help you.
