P11Ds and the Move to Payrolling
Benefits: What Employers Need to Know
The way you report benefits like company cars and medical cover is changing.
Here is what is happening, and when.
By Karlee Pegley, Client Manager
If you give your team benefits such as company cars or private medical cover, you have probably always reported them on a P11D after the tax year ends. That is changing, and getting ahead of it now will save you a scramble later.
What is payrolling benefits?
Instead of reporting a benefit once a year on a P11D, its taxable value is put through your payroll each pay period, so the tax is collected in real time alongside salary. Many employers already do this voluntarily, and most find it far simpler than the annual P11D exercise.
What is changing, and when?
Mandatory payrolling of benefits was originally due to start in April 2026, but HMRC has pushed it back. It now begins in a phased way from 6 April 2027. The first phase covers company cars, car fuel, vans, van fuel and employer-provided medical benefits. Full payrolling of the remaining benefits is expected to follow from April 2028.
Do I still need to file P11Ds?
Yes, for now. P11Ds and P11D(b)s are still required for tax years up to and including 2026/27, with the 2026/27 forms due by 6 July 2027. After the switch, P11Ds are only expected to be needed for a couple of benefits such as beneficial loans and living accommodation. Class 1A National Insurance still applies and will be collected through payroll.
Why act now?
You can register to payroll benefits voluntarily before the change is forced on you. Do that and you smooth the transition, avoid a big year-end P11D job, and give your people a clearer, real-time picture of their tax. The catch is timing: you have to register before the start of the tax year you want to payroll from, so it pays to plan ahead.
Figures and dates are correct at the time of writing. We always check the latest HMRC position for your business.
This is exactly the kind of change we handle for clients every day. We can get you set up to payroll benefits early, keep you compliant, and make sure nobody gets an unexpected tax bill.
