Are you planning for Payrolling Benefits?

A review of changes to the way companies treat Benefits in Kind

Within the budget in October 2024 the Chancellor confirmed that the payrolling of ‘benefits in kind’ is still planned to become mandatory from April 2026. 

What are Benefits in Kind?

Some of the most common benefits are:

• Company Cars

• Private Medical Insurance

• Living Accommodation

• Interest Free and Low Interest Loans

What is changing?

Currently benefits are reported once a year on Forms P11D and P11D(b) however with payrolling the benefits this means that employers will need to report these benefits in real-time through the submissions of their payroll to HMRC each pay period.

From the employees’ point of view, they will not have tax for these benefits collected in arrears but collected when it is due at the right time. This will make it easier to understand what they are paying tax on.

What can you do now to plan?

• What benefits in kind do you have? – Are they mandated to be submitted in real-time from April 2026?

• Review current arrangements - Do you do the payroll or is it outsourced to us or another provider?

• Employee impact and communication – as soon as HMRC release detailed guidance later this year notify employees of how this will affect them.

• If you do your payroll or P11Ds, what systems do you currently have in place? – If nothing is in place set up a robust system to keep accurate records of which employees have what benefits and have clear records of how the benefit is calculated.

• What payroll deadlines do you currently have? – Review these as benefit changes and benefits for employees leaving will need to be incorporated into this new system.

Did you know….?

You can opt in to reporting this voluntarily from April 2025 but to do this you need to advise HMRC before 5th April 2025.

If this is something you are interested in or you have any questions regarding the changes, please contact Lorraine in our payroll team who can assist you.