- On 16 January 2024, as part of a ‘Tax simplification update’, HMRC announced a package of measures, including the mandatory payrolling of all benefits in kind from April 2026. So far, HMRC have released little detail on how this change will work exactly but to date, they have confirmed that:
- The intention is for payrolling of benefits to be mandatory for all employers and all benefits.
- Income Tax and Class 1A will need to be reported and remitted by employers through Real Time Information reporting, removing the need to file Forms P11D and P11D(b).
- Forms P11Ds/P11D(b)s will still need to be produced for tax years up to and including 2025/26 (filing deadline 6 July 2026).
- Providing benefits in kind is an integral part of most employers’ reward strategy which impacts multiple stakeholders, including HR/reward, benefit providers/vendors, tax, payroll, software providers, and of course employees. The change to payrolling all benefits for all employees will require a major transformation project for most organisations, involving buy-in and co-operation from all stakeholders involved.
- Timing: HMRC have announced that all benefits in kind will need to be reported via the payroll from 6 April 2025. Further updates from HMRC regarding policy decisions are expected during 2024.
Resources (click to open)
- Mandatory Payrolling All Benefits In Kind – The End Of P11Ds - On demand (Deloitte Dbriefs Webcast, 14 March 2024)
- Mandating the payrolling of benefits in kind (HMRC policy paper, 16 January 2024)
