At present, where employees receive a taxable benefit from their employer, there is a requirement to report this to HMRC. Employers can choose between submitting P11D forms annually to report these for tax purposes or opting in to payrolling benefits (meaning real-time taxation through PAYE). HMRC have issued a recent update, confirming that from 6 April 2026, there will be a mandatory implementation of payrolling benefits.
Currently, most benefits can be included in payrolling. The exceptions are employer-provided living accommodation and interest-free or low-interest (beneficial) loans. Therefore, further guidance is needed on the tax treatment of these specific benefits with the new changes.
At present, even if the employer is payrolling benefits, there is still a requirement to submit a P11D(b) form annually to report the liability of Class 1A National Insurance contributions (NICs). From 6 April 2026, the HMRC update clarifies that the reporting and payment of Class 1A NICs will also transition to processing via payroll software.
The change hopes to streamline and digitise the process, reducing the administrative burden. It is estimated that the changes will eliminate the requirement for submitting approximately 4 million end of year returns.
If you’d like more information on the changes, please contact the team at hello@drummondlaurie.co.uk .