Payrolling Benefits In Kind replaces P11D reporting, as taxable benefits are included in taxable pay when calculating the PAYE deducted from payments of wages and salaries to employees.
The is a freeview At a glance guide, Subscribers see the full version of this guide in Payrolling Benefits in Kind.
At a glance
- Payrolling Benefits In Kind becomes mandatory for employers from 6 April 2026.
- Payrolling taxable benefits is an alternative to reporting them on form P11D.
- The value of certain taxable Benefits In Kind (BIK) can be included in taxable pay when calculating the PAYE deducted from payments of wages and salaries to employees.
- Employers must apply for and receive authorisation from HMRC before making deductions of Income Tax.
- Employers who currently have an informal agreement with HMRC to payroll certain benefits will need to re-apply.
- The application must be in an approved electronic format and employers must register with HMRC's online registration service.
- Employers may voluntarily take up payrolling before April 2026 they need to register to do so before the start of the tax year, if they register on or after 6 April 2024, they will be unable to start to payroll benefits until 6 April 2025.
All benefits except the following can be included in the payroll:
- Living accommodation.
- Interest-free and low-interest (beneficial) loans.
Reporting requirements
- Employers must provide employees with a written statement identifying which benefits have been included in the payroll by 1 June following the end of the tax year, including the value of the benefits.
- All payrolled benefits and expenses should be included in the Real-Time Information (RTI) Full Payment Submission.
- Form P11D will no longer be required where all benefits have been included in the payroll.
- Form P11D is required for any non-payrolled benefit.
- Form P11D(b) must still be submitted to report Class 1A National Insurance Contributions due on expenses and benefits whether or not they have been included in the payroll.
Registration
- Employers must apply for authorisation from HMRC before the start of the tax year (6 April) if they want to payroll benefits for the following year.
- Applications must be made online.
- Although HMRC guidance indicates that the processing of applications will be an overnight process, a government gateway account is required which can take some time to set up.
- Agents can register employment benefits that will be taxed through their client's payroll in 2025/26 onwards.
