P11Ds and Payrolling Benefits

If you are an employer and you provide expenses and benefits to employees and directors, you must report these to HMRC and pay National Insurance on these benefits. Currently they are reported to HMRC using forms P11D and P11D(b). After the end of the tax year the taxable value of the expenses and benefits is calculated and reported to HMRC on forms P11D and P11D(b) by 6 July. The employer then pays the Class 1A National Insurance liability by 22 July.

From 6 April 2027, this will change, and employers will be mandated to report the expenses and benefits via payroll. The associated Class 1A National Insurance liability will also be due for payment at this time. As these amounts will be paid in real-time, it is expected to reduce underpayments or overpayments occurring.

What do you need to do now?

To ensure you are ready for the change in system, employers should check the following:

• Does your current payroll software have the functionality to allow you to payroll benefits? Where Clarand are already preparing your payroll, we can confirm that you are already ready.
• Let your employees with benefits know about the changes. When employees move to payrolled benefits, they should check their PAYE code to ensure any adjustments are no longer included in their code.
• Decide who will be responsible for collating the benefit data and checking the taxable values are correct each pay period. This will also include information in relation to joiners and leavers along with any changes to the benefits provided during the year.

If you would like to voluntarily register to submit payrolled benefits from 6 April 2026, please let us know, and we will let you know how to register.