As of 6 April 2026 it will become mandatory for all UK businesses to payroll benefits in kind provided to employees. HM Revenue & Customs (HMRC) have implemented this change as part of its wider plans to digitalise the systems for tax. This will mean that the P11D submissions will become redundant, however a P11D(b) will still be required at the end of the tax year to report the liability of the Class 1A National Insurance Contributions via payroll software.
To payroll any benefits in kind you will need to register online with HMRC which must be done before the start of the tax year.
You will need to give written notification to the employees this will effect and some examples of this are:
- Payslip
- Letter
You must send the notification by 1 June after the end of each tax year. The notification must tell your employees that they will not be taxed twice because you have registered to payroll their benefits with HMRC before the start of the new tax year. You should include the following information:
- details of the benefits you have payrolled, for example car fuel — this can include what the benefits are, the value, the cash equivalent and which ones have been subject to PAYE tax
- the amount you have payrolled for optional remuneration
- details of benefits you have not payrolled
You should also tell your employees what will happen during the first year. They will need to know that:
- their tax code will change to take out the adjustment for their benefits in kind
- you will put the adjusted amount through payroll each month and they will pay tax on that amount
- at the end of the year you will tell them how much taxable benefit they have had in the year and what it was for