From April 2026 employers will be required to make the payrolling of benefits compulsory. Employers who provide taxable benefits to their employees and directors have little over a year to prepare for the changes. The reporting process for benefits in kind will be through the Full Payment Submission (FPS), the same process as currently used to report salaries to HMRC.
Benefits in kind are extra perks that employers can provide to their employees. They are non-cash benefits, so things such as company cars, private healthcare, gym memberships etc.
Payrolling of employment-related loans and accommodation will be voluntary for 2026/27, with a timetable to mandatory payrolling of these benefits being published at a later date. Until then, forms P11D and P11D(b) can be used to report loans and accommodation, but cannot be used for any other benefit in kind.
How can you get ready for the switch to payrolling of benefits:
- Identify any taxable benefits within your business.
- Ensure you have up to date management information flowing as any changes will need to be reported during the year as they happen rather than just at year end.
- Communicate with your staff about the changes early. They will have tax deducted monthly rather than after the P11D is submitted at year end and this could cause confusion for some.
If you would like help with benefits in kind and payrolling of benefits please book a discovery call with us here.
