Payrolling benefits in kind is an efficient way for employers to manage the reporting of employee benefits such as company cars and medical insurance. By including these benefits in your payroll, you can ensure that any income tax owed on them is paid by employees throughout the tax year, avoiding the need for form P11D.

While most benefits in kind can be processed through payroll, there are exceptions. Employer-provided living accommodation and beneficial loans (such as interest-free or low-interest loans) must still be reported on a P11D.

If you wish to payroll benefits, registration with HMRC is required before the beginning of the tax year in which you plan to start. Even when payrolling is used, employers must still include the total taxable benefit value in the P11D(b) summary and pay Class 1A National Insurance Contributions (NICs) on this amount. The deadline for filing P11D(b) and settling Class 1A NICs is 6 July following the end of the tax year.

What’s Changing?
From 6 April 2026, payrolling benefits in kind will become mandatory for all employers. However, living accommodation and beneficial loans will remain optional under the regime. Employers have the option to adopt this approach voluntarily from 6 April 2025, providing an opportunity to streamline processes ahead of the mandatory implementation.

At Wilson Partners, we’re here to guide you through these changes, whether you’re planning to make an early switch or need clarity on your future obligations. Let us help you simplify your compliance processes and ensure a seamless transition to payrolling benefits in kind.

Feel free to get in touch to discuss how this change might impact your business and how we can support you in managing it effectively.