With the end of the 2024/25 tax year, employers need to start thinking about their obligations regarding employee benefits and expenses reporting. This article provides an overview of the P11D obligations as well as the new mandatory payrolling rules set to be introduced from April 2027.
P11D Obligations
Employers must report any taxable benefits in kind provided to their employees on forms P11D and P11D(b). Benefits in kind (Bik) include anything of monetary value provided to an employee that is not ‘wholly, exclusively and necessary’ for their job. Typical benefits include, but are not limited to, company cars, medical insurance, beneficial loans, living accommodation and gym memberships etc.
The key deadlines and requirements for the 2024/25 tax year are as follows:
• Deadline for submission: Forms P11D and P11D(b) must be submitted to HMRC by 6 July 2025. Employers must also provide employees with a copy of their respective Form P11D by this date.
• Class 1A national insurance contributions (NICs): Employers must report the amount of Class 1A NICs owed on Form P11D(b). The rate for Class 1A NICs for the 2024/25 tax year is 13.8% (increasing to 15% from April 2025). Payments must be made by 22 July 2025 if paying online, or by 19 July 2025 if paying by cheque.
Failure to complete the above forms correctly (e.g. a mistake or omission) can result in a penalty of up to £3,000 per form. Additional penalties also apply for failure to submit the forms by the 6 July deadline. Furthermore, if there is a Class 1A NIC liability due and it is not paid within 30 days of the 22 July due date, a penalty of 5% will apply, increasing by a further 5% after both six and 12 months, from the due date.
New Mandatory Payrolling Rules
The Government were set to mandate the reporting of most BiKs via payroll software with effect from April 2026, however, have since pushed this back until April 2027.
With effect from April 2026, the government will mandate the reporting of most Biks via payroll software.
Employers will be required to report and pay income tax and Class 1A NICs on most Biks in real-time through PAYE using real time information (RTI), with the exception of employment-related loans and accommodation, which will be mandated in at a later date.
This change will mean that most employers will no longer be required to file P11D or P11D(b) returns for tax years 2027/28 onwards, unless they have one of the excluded benefits identified above (although they may choose to voluntarily payroll these benefits also).
Employers should ensure they are ready for the transition to mandatory payrolling by familiarising themselves with the new requirements and updating their payroll systems accordingly.
If you require any assistance with preparation of your P11D forms or would like further information on the transition to mandatory payrolling, please get in touch with your usual tax contact.
