Current position
If an employer provides their employee with a benefit in kind such as a company car or medical insurance, this is taxable and a Form P11d will need to be completed at the end of each tax year to report this to HM Revenue and Customs.
The tax is typically collected by placing a restriction for the cash equivalent of the benefit in the employees tax code.
What is changing?
On 16 January 2024 the government announced that, with effect from 6 April 2026, Income Tax and Class 1 A National Insurance contributions on the provision of benefits in kind to employees will be collected via payroll in ‘real time’.
This means that the 2025/26 tax year will be the last year that employers will be able to file forms P11d to report benefits.
The measure is not meant to increase taxes for anyone – it is aimed at making it quicker and easier for employers to report benefits in kind.
Do you need help with your payroll?
The payrolling of benefits represents another layer of complexity for people running payrolls. Has the time come to outsource your payroll to a team of UHY professionals?
Our team of experienced staff will liaise with your business to make sure that your payroll is completed within all the relevant deadlines and is fully compliant with all legislative requirements. We offer a unique and bespoke service to our clients and will be able to assist with the transition to payrolling benefits in kind and any further legislative changes which may occur.
The next step
If you would like to discuss your payroll requirements please contact Nicola Bryan on n.bryan@uhysheffield.com, Claire Topham on c.topham@uhy-uk.com, or your usual UHY adviser.
