Employer Bulletin: June 2026

HMRC have published their Employer Bulletin for June 2026. Key content includes an update to the implementation of mandatory payrolling of benefits and a reminder of the upcoming deadlines for reporting employee benefits.

Update: mandatory payrolling of Benefits In Kind (BIKs) to launch in phases

Following engagement with employers, payroll software developers and representative bodies, the government has decided to phase in the mandatory payrolling of BIKs from April 2027.

• From 6 April 2027 to 5 April 2028, mandatory payrolling will apply only to company cars, car fuel, vans, van fuel and medical benefits. 
• Mandatory payrolling for most other benefits will be introduced from April 2028.
• Phasing delivery in this way will support employers and payroll providers in preparing to adapt in a manageable way.
• Employers will be able to register for voluntary payrolling from November 2026 for all other BIKs that have not been mandated to be payrolled from April 2027, including loans and accommodation. 
• HMRC are considering expanding the voluntary service to allow for the payrolling of Class 1A NICs.
• Further information will be provided in due course. 

Guidance is being updated to reflect these changes. This is expected to be published in July 2026.

• HMRC expect the final guidance for phase 1 to be published in Autumn 2026.

See HMRC announces phased roll out of mandatory payrolling and Mandatory payrolling of benefits from 2027: Briefing

PAYE Settlement Agreement (PSA): agreements and mailbox closure

The deadline for applying for a PSA or making any amendments to an existing PSA is 5 July following the first tax year to which it applies.

• For example, for the tax year 2025-26, you will have until 5 July to apply for your PSA.

PSAs are an agreement between an employer and HMRC.

• There is no specified format for this, but HMRC's preferred method of applying for a PSA is online.
• If you write to HMRC, it may take them longer to set up an agreement.
• Use your PAYE reference, and not your accounts office reference, when submitting your request.

This agreement is enduring and remains in place until changed or cancelled by HMRC or the employer. 

• If you already have an agreement in place and want to amend it, you must make sure that you include all items you want to keep as well as any new benefits you want to add. The new agreement will replace any previous arrangement you had. 

You must include specific details of what the benefit relates to. For example, descriptions such as 'other' or 'miscellaneous' will not be accepted. 

Make sure you keep a copy of your signed agreement and covering letter, as this includes information you will need when making payment, such as your Specific Account File/Employer reference (SAFE) reference number. 

Mailbox closure:

• The PSA mailbox closed on Friday, 29 August 2025.
• HMRC no longer accept PSA correspondence by email. 
• You can submit PSA calculations and apply for, amend or cancel PSAs using online forms. 
• If you are unable to use the online PSA forms or have any submissions to make to the PSA team, write to:
  • PAYE Settlement Agreements
    HM Revenue and Customs
    BX9 2AN

See PAYE Settlement Agreements

Reporting expenses and benefits for the tax year ending 5 April 2026

P11D and P11D(b) filing and payment deadlines:

• For those employers who do not payroll expenses and benefits, the deadline for reporting P11D(b) Class 1A National Insurance Contributions (NICs), P11D expenses and Benefits In Kind (BIK) provided in the 2025-26 tax year, is 6 July 2026.
• Payment must reach HMRC by 19 July 2026 if paying by cheque, or 22 July 2026 if paying electronically.
• All P11Ds and P11D(b) for the 2025-26 tax year must be filed online and at the same time. 
• When submitting your P11Ds and P11D(b), make sure that the business name is entered exactly as registered, without any abbreviations, punctuation or alterations. 
• Late submission may result in a penalty.
  • HMRC charge penalties monthly and issue penalty notices each quarter until a return is received. 

How to submit P11Ds and P11D(b) online:

• The forms can either submit using:
  • HMRC's PAYE online service for up to 500 employees.
  • Commercial payroll software.

P11D(b):

• A company needs to submit a P11D(b) form if:
  • It has submitted any P11D forms.
  • It has paid any employees' expenses or benefits through the payroll. 
  • HMRC have asked for a P11D(b) form to be filed by sending you a notification to do so. 
• The P11D(b) form tells HMRC how much employers' Class 1A NICs will be needed to pay on all the expenses and benefits provided to employees through payroll, as well as any reported to HMRC on a P11D form. 

Nothing to declare

• Companies only need to tell HMRC that it does not need to make a return if HMRC sent a notice to file, or a reminder to file a P11D(b), and there is nothing to declare. 
• Tell HMRC by completing a 'no return of Class 1A NICs form'. 

If you make a mistake

• You need to complete online correction forms, which can be found in HMRC's expenses and benefits for employers guidance. 

See P11D: Reporting benefits and expenses

Paying Class 1A NICs

Electronic payments for Class 1A NICs declared on P11D(b) return for the tax year ended 5 April 2026 must clear into HMRC's account by 22 July 2026.

• Make sure the payment is correctly allocated by providing the correct payment reference. 
• Use the 13-character accounts office reference followed by 2613. The reference should have no gaps between the characters.
• Adding '2613' is important because '26' tells HMRC the payment is for the tax year ended 5 April 2026, and '13 lets HMRC know the payment is for Class 1A NICs. 

See P11D: Reporting benefits and expenses

Tax relief on employee contributions to registered pension schemes

The Low Incomes Tax Reform Group (LITRG) have made HMRC aware of an error in the August 2023 issue of the employer bulletin.

The text below is a complete replacement for the section of the August 2023 issue of the employer bulletin entitled 'Tax relief on employee contributions to registered pension schemes'.

There are two main methods to obtain tax relief on employee pension contributions. 

HMRC have found that some employers are making mistakes in their reporting, which may be due to the names given to each HMRC method.

These methods are known as:

• Net Pay Arrangement (NPA): referred to as 'employee pension contributions that are paid under a net pay arrangement' on the Full Payment Submission (FPS).
• Relief At Source (RAS): referred to as 'employee pension contributions that are not paid under a net pay arrangement' on the FPS.

NPA

• For an NPA, the employer will deduct the pension contribution from an individual's earnings before operating PAYE.
• The employee will automatically get tax relief at their marginal rate of Income Tax without needing to make any additional claim.

RAS

• The employer will deduct an amount from pay for the pension contribution after Income Tax has been charged through PAYE deductions. 
• The pension scheme provider will claim the basic tax rate equivalent from HMRC's Pension Scheme Services and top up the individual's pension pot by the amount claimed. 
• In RAS arrangements, the individual will need to claim any higher or additional rate tax relief from HMRC against their tax code or self-assessment.
• For example, an individual making a relievable pension contribution of £100 actually contributes £80 through a deduction by the employer from their pay after PAYE charges.
  • The £80 is passed on by the employer to the pension scheme provider.
  • The pension scheme provider subsequently and separately claims the basic rate tax equivalent of £20 from HMRC's Pension Scheme Services, which is added to the employee's pension pot.
  • The individual would then need to contact HMRC to claim any additional relief due.

The individual cannot choose the method of tax relief for themselves.

• The default for all new registered pension schemes has been RAS since April 2006.
• An employer can elect at the start of a new pension scheme to operate an NPA as long as that scheme meets certain conditions.
• Once registered, the form of tax relief is set. 

Real-Time Information (RTI) FPS submissions and examples of mistakes:

• This could be when an employer makes a mistake in reporting Relief At Source (RAS) contributions, not under net pay,  through RTI in the data fields for a net pay scheme.
• This results in providing tax relief through payroll incorrectly, in addition to the tax relief correctly provided through the pension scheme provider and HMRC's Pension Scheme Services.
• The excess relief provided is an employer payroll failure, and the employer is liable for the tax under-deducted and not remitted to HMRC.

Any employer who is uncertain should check with their scheme provider on how the scheme is registered.

• If any employer then determines that their payroll is configured incorrectly, they should correct this immediately. 
• Their payroll will be incorrect if they have reported:
  • net pay contributions in the FPS reporting field for 'employee pension contributions that are not paid under an NPA', or
  • RAS contributions in the FPS reporting field for 'employee pension contributions paid under an NPA'.
• Any errors identified from previous periods should be reported through the HMRC digital disclosure facility.
• If you are a large business with a Customer Compliance Manager (CCM), you should report this through direct engagement with your CCM.

See Pensions: Tax rules and planning

Low-earner's pension payment: what employers need to know

From August 2026, HMRC will be contacting around 1 million eligible individuals directly about the low earner's pension payment, previously referred to as the low earner's anomaly.

• This payment makes sure low earners achieve similar outcomes regardless of the type of workplace pension scheme they are in.

Employers do not need to take any action.

• There is no requirement for employers or payroll teams to apply, assess eligibility, amend payroll records or contact HMRC on behalf of employees.
• HMRC will identify eligible individuals and contact them directly. 

An employee may be eligible if they did not obtain Income Tax relief on their pension contributions in any tax year from 2024-25 onwards. This would be if they meet both these conditions:

• Earned close to the personal allowance in a tax year, typically £12,570.
• Contributed to a workplace pension through a net pay arrangement pension scheme.

HMRC will assess eligibility separately for each tax year, and individuals may qualify for one or more years, from 2024-25 onwards.

• Employers do not need to assess eligibility or confirm pension arrangements for employees as part of this process.

Individuals do not need to contact HMRC to receive a payment.

If employees approach you with questions, you can reassure them that:

• Eligible individuals should wait to be contacted by HMRC, either by post or through their personal tax account.
• Once they have received contact, eligible individuals should follow the instructions provided by HMRC to accept their payment.

As HMRC will contact individuals about money they are owed, employers may receive questions about whether messages are genuine. Employees can be reassured that:

• HMRC correspondence can be checked on GOV.UK by searching to check if an email you've received from HMRC is genuine.
  • Low earners' pension payments can be found from August 2026.
• HMRC will never ask for money transfers, PIN codes, or passwords. 

Basic PAYE Tools (BPT): updated release

An important maintenance update to the BPT was released in May 2026, following the main release towards the end of March 2026, for the 2026-27 tax year. 

• You must update and use the latest release of BPT, version 26.1.

To update or check for updates:

• Select 'Check now' in the update section of settings in the top right-hand corner of the tool.
• Set the automatic update to 'Yes'.

As a new employer, before you can use BPT to run your payroll, you must have registered for online PAYE as instructed in your new employer letter. 

Reminder: file monthly Construction Industry Scheme (CIS) returns or face late-filing penalties

From April 2026, CIS contractors are legally obliged to file a CIS return every month, including nil returns in months where they have not used a subcontractor. 

HMRC expect CIS contractors to do one of the following:

• File a CIS return showing payments. 
• File a nil return where they have not used subcontractors.
• Submit an inactivity request (this lasts 6 months).

CIS contractors can submit nil returns and inactivity requests through the CIS online service and some commercial CIS software.

Failure to file any kind of CIS return for the period 6 April to 5 May 2026 could result in the following late-filing penalties:

• A first fixed penalty of £100.
• A second fixed penalty of £200 after two months in July 2026.
• A tax-geared penalty after six months in December 2026 of a minimum of £300 or 5% of any liability which should have been shown on the return. 
• A further tax-geared penalty at 12 months, with the amount depending on why the return was late.

Penalties will only be issued where contractors have neither submitted an inactivity request nor filed a return.

• Most CIS contractors already file on time and submit nil returns or notify HMRC of periods of inactivity where required. 
• They will be unaffected by these changes.

HMRC will continue to work with contractors to minimise administrative burdens where possible. 

See CIS: Contractors and Subcontractors

Voluntary NICs abroad

In the 2025 Budget, the government announced changes to voluntary NICs abroad.

From 6 April 2026, for tax years 2026-27 onwards:

• The option to pay voluntary Class 2 NICs for periods abroad has been removed. 
• New applications to pay voluntary Class 3 NICs for periods abroad will only be accepted where the individual has either 10 years’ continuous UK residency or has paid at least 10 years of NICs.

If you have workers abroad, inform them of the changes that came into effect in April 2026.

• The changes do not affect anyone purchasing voluntary NICs for tax years before 2026-27.

HMRC encourages employers to review the latest guidance on voluntary NICs for periods abroad from April 2026 and the tax impact and information note detailing the voluntary NICs changes. 

• The changes are being made to ensure that individuals building a state pension from outside the UK have a sufficient link to the nation and are paying a fairer price to do so. 

See Globally mobile employees: National Insurance

Check if you need to apply for Vaping Products Duty (VPD) and Vaping Duty Stamps (VDS) Scheme approval

From 1 April 2026, UK vaping product manufacturers, importers and warehouse keepers can apply for VPD and VDS Scheme approval. 

• Applying early helps avoid production delays and protects your ability to trade from 1 October 2026.
• If you are not approved by this date, you cannot lawfully produce vaping products in the UK.
• Businesses should apply as soon as possible if they expect to be affected.

Guidance is available if, after checking, you need to apply for approval for the VPS and VDS Scheme. 

• HMRC recommend applying as soon as possible to ensure you have the necessary approval before 1 October 2026.
• It can take at least 45 working days to process an application. 

When applying for approval, you must use a government gateway ID that is linked to a Unique Taxpayer Reference (UTR) number for either self-assessment or Corporation Tax. 

You also need to provide information to HMRC, including the:

• Business name and address.
• VAT or Corporation Tax number, if you have one. 
• Name of a responsible person.
• Premises plan.
• Business plan.
• Financial guarantee from a financial institution, if HMRC ask you to.
• Number of vaping duty stamps you need within a three-month period, for each capacity that you are applying for the stamps.

Having this information ready before you apply will help avoid processing delays and requests for further information.

• If you are not approved by 1 October 2026, you cannot lawfully produce vaping products in the UK, and if you do, you will be subject to civil and criminal sanctions, potentially leading to prison sentences.

This is a legal requirement linked to the introduction of VPD and the VDS Scheme, rather than a change in HMRC's enforcement approach.

Look twice to spot bad tax advice

HMRC's 'Don't get caught out' campaign encourages contractors working through umbrella companies to take a closer look at their circumstances and watch out for tax avoidance.

• Your contractors can use HMRC's online guidance and tools to learn about tax avoidance and to understand how they are paid and how to check if the right amount of tax is being paid to avoid an unexpected tax bill later. 

Watch real-life stories of people caught out by tax avoidance and a short explainer YouTube video on how umbrella companies work.

• Contactors can also review HMRC's list of Published named tax avoidance schemes and their promoters.
  • This is not an exhaustive list.
  • HMRC never approve such schemes, even if promoters say otherwise.

To help your contractors identify, leave or report a tax avoidance scheme, you can use HMRC's campaign resources in your newsletters, website updates and social media channels.

Claim a tax refund in minutes

HMRC may have contacted you or your employees about a tax refund. 

• For most PAYE taxpayers, refunds are no longer issued automatically by cheque.
• Employees now need to take action to receive any money they are owed.

You should encourage your employees to:

• Check the HMRC app or their Personal Tax Account (PTA) to see if they are due a refund.
• Claim their refund online if prompted.
• Make sure their personal details are up-to-date with both their employer and HMRC.

Employees can check and update their details, including their postal address, in the HMRC app or the PTA. 

• Having the correct details helps make sure important letters and payments are not delayed.

How employees can claim

1. Open the HMRC app or sign in to their PTA.
2. Go to 'Pay As You Earn (PAYE).
3. Look for a green 'Claim' button if a refund is due.
4. Select ' Claim' to request the refund.

Refunds are normally made by bank transfer within one week.

Employees do not need to be fully set up for HMRC online services to claim.

• Those who are digitally excluded or who prefer a paper cheque can still request one. This will take longer to arrive.

Your employees will need their:

• P800 reference number, which can be found on the tax calculation letter.
• National Insurance number. 

Helping your workforce get ahead: encourage sending tax returns early

Many employers support people who need to complete a Self Assessment tax return, such as company directors or people with income outside PAYE, for example, from renting out a property, freelancers or those with side income.

• You can help by encouraging them to submit their 2025-26 tax return early, rather than waiting until the 31 January 2027 deadline. 
• Submitting your tax return early does not change when tax is due, but it can make a real difference to an employee's confidence, planning and cash flow. 

There are clear benefits to submitting your tax return early. These include:

• Peace of mind: avoids last-minute pressure and reduces the risk of errors or missed deadlines.
• Certainty: people can see what they owe sooner and plan for their January 2027 payment. 
• Receiving refunds sooner: if tax has been overpaid, refunds can be processed earlier.
• Proof of income: the tax return and calculation are useful when applying for a mortgage, loan, or benefits.

Employers do not need to give tax advice.

• Simple prompts and reminders can help, such as including a short reminder in staff or contractor communications.

Signposting people to official HMRC support helps them get it right the first time. This provides clear, step-by-step support for employees, including:

• Online guidance and tools.
• The digital assistant and webchat.
• Webinars, videos and help sheets.
• HMRC online accounts and the HMRC app.

External link

June 2026 issue of the employer bulletin