HMRC are replacing reporting of employee expenses and benefits on a P11d after the end of each tax year. From April 2026 it will be mandatory to report employees’ expenses and benefits through the payroll on a monthly basis. Currently expenses and benefits can be reported either by P11d or voluntarily through the payroll.
All benefits which an employee receives are likely to be taxable and subject to National Insurance contributions. Benefits are items such as company cars, health insurance and gym membership, to name just a few. There are a vast array of expenses which an employee may receive which could be taxable and/or subject to NI by the employee, by yourself or both. Here is a link to HMRC's list of Expenses and Benefits and how they should be treated.
Submitting expenses and benefits information on a monthly basis, rather than annually after the end of the tax year, will mean the deductions due for tax and NI will be made monthly instead of a change of tax code several months after the tax year end.
The changeover period from P11D to monthly payrolling of benefits will affect employees pay. P11D reporting of expenses and benefits creates a tax code change for an employee from July onwards to recover tax due on benefits. Payrolling of benefits will take tax from the first month – April 2026. So employees with regular benefits will start paying tax on the current year benefits at the same time as paying tax on the previous year/s benefits. This could cause hardship for some employees for a while so employers might need to consider what help they can offer their employees during this period of change.
This link to HMRC will give you, as an employer, more guidance on expenses and benefits and what is reportable, either now on a P11D or from next April through the payroll.
As a payroll provider we will be submitting employees' expenses and benefits through payroll from April 2026.
