Benefits-in-kind reporting changes ahead: Are you aware?

Did you know that the 2026/27 tax year will be the final year in which employers can submit forms P11D to HMRC?

For that year, the existing rules will still apply, and benefits in kind must be reported in the usual way by July 6, 2027.

However, from April 6, 2027, onwards, P11Ds will no longer be required for most benefits, as these will instead be dealt with through payroll.

Employers will still be required to submit form P11D(b) each year. This remains necessary to declare the total value of benefits provided and to calculate the Class 1A National Insurance Contributions (NICs) due.

Importantly, although benefits will be taxed through payroll, Class 1A NICs will continue to be calculated and paid separately after the end of the tax year.

Also, from April 6, 2027, employees will no longer see benefits-in-kind reflected in their tax codes. Instead, benefits will be taxed in real time through payroll, with the annual value spread across the relevant pay periods and shown on payslips.

This should make the position clearer for employees, as they will see the tax being applied as the benefit is received, rather than through later tax code adjustments.

For employers, the move to mandatory payrolling is expected to reduce the year-end administrative burden, as forms P11D will no longer be required for most benefits.

However, accurate reporting through payroll during the year will be essential.

Employers should ensure that employees are informed of these changes, particularly the removal of benefits from tax codes and the move to real-time taxation via payslips.

If you would like assistance in preparing your payroll for these changes, please contact your usual WNJ Partner or Edward Cullen at EDC@wnj.co.uk.