The Autumn Statement 2024 confirmed HMRC will be changing the way employers report Benefit in Kind Income Tax and Class 1A National Insurance Contributions, with effect from April 2026.
What is changing for benefit-in-kind (BiK) reporting?
Previously, any Benefits in Kind provided to employees could be reported to HMRC through a P11d form submitted at the beginning of the following tax year.
From April 2026, this option will be eliminated for most Benefits in Kind apart from employment related loans and accommodation.
Instead, HMRC will require that employers register to have their Benefits in Kind payrolled before the start of the tax year.
This means that the cash equivalent of the Benefit will be divided across the number of relevant pay periods for each employee and reported alongside the employee’s salary through monthly RTI submissions via a payroll software. At the end of each tax year employers must instead submit a form P11d(b) to report the Class 1A NICs owed from the business on the Benefit in Kind.
The aim of this is to allow HMRC to collect the tax owed on benefits in kind in real time to make it easier for employees to understand what they are being taxed on.
What is a Benefit in Kind?
A Benefit in Kind is any non-cash advantage/service of monetary value provided to employees with a cash equivalent, including but not limited to:
Company cars
Gym memberships
Private health insurance
As these benefits are classed as income for employees on the payroll, they are subject to tax and employer NI contributions and must be reported to HMRC.
What does this mean for you?
If your company does not pay for any Benefits in Kind for any employees/directors, then you do not need to make any changes. Only employers who previously had to submit an annual P11D will need to make changes.
What do I do next?
For those who do need to submit a P11D currently, the change from April 2026 means that you will need to register for payrolled benefits before 6th April 2026, and you will no longer have the option to submit your own P11D whilst we are running the payroll (unless your benefit in kind is either accommodation or an employment related loan).
If we are reporting your payroll, we will also need to report your Benefits in Kind.
How much will I be charged for this extra service?
These changes to the reporting rules will require additional work. The cost for us to report your Benefits in Kind will be £200+VAT per tax year.
If you pay monthly via direct debit, then this fee will be split throughout the year and included as part of your monthly payments.
If you are currently on our £12+VAT director-only payroll service that does not provide payslips, you will also need to move to our £24+VAT standard payroll service so we can provide you with monthly reports confirming the amount of tax owed to HMRC.
Can I payroll my Benefits in Kind before April 2026?
Yes, you can choose to voluntarily payroll your benefits for the upcoming tax year if you’d like to get a head start!
You will need to be registered for payrolled benefits before the start of the upcoming 2025/26 tax year that starts 6th April 2025 to payroll your benefits moving forwards.
You cannot change over to payrolled benefits after the tax year starts.
Please contact your payroll clerk directly, or email us at payroll@theaccountancy.co.uk so we can assist you.
HMRC will offer further guidance in advance of the reporting changes in April 2026, so we’ll be sure to update you once the information is available to us. If you have any questions about Benefits in Kind in the meantime, please get in touch and we’ll be happy to help.