Payrolling benefits in kind becomes mandatory from 6 April 2026 — P11Ds are going

A heads-up for employers: from 6 April 2026, payrolling benefits in kind becomes mandatory. Most benefits — company cars, private medical insurance, gym memberships and the like — will have to be reported and taxed through payroll in real time. The voluntary regime ends, and the familiar P11D forms are being abolished.

What's changing:

• Benefits taxed through payroll each pay period, instead of being reported after the year end on a P11D.
• - P11Ds survive only for two carve-outs: living accommodation and beneficial or employment-related loans, which stay on the P11D.
• - Class 1A NIC on benefits remains the employer's liability, at 15%.
• - Employees pay the tax on their benefits monthly via PAYE, rather than through tax-code adjustments the following year.

What to do now:

• Tell employees in advance — net pay may shift in the transition year as tax collection moves from annual adjustments to monthly deductions.
• - Make sure your payroll software is set up to payroll benefits from April 2026 and that your benefits data (car lists, medical cover, etc.) is clean and complete.
• - Review any salary-sacrifice or flexible-benefits arrangements so everything is captured correctly in the first payroll run.

The P11D had a long run, but real-time reporting is the future. Getting ahead of this now will save a painful April.