If you have ever had a job with perks or benefits for working there, like a company car, medical insurance or gym membership then you will have been sent a P11D. It’s that annoying document that you get sent at some point between April and July after the tax year that doesn’t mean a lot to you and then you need to find it to complete your personal tax return. The P11D gives you a financial value for those perks.
What is changing
HMRC have confirmed from April 2026 the reporting of these perks will need to be done via payroll and you’ll no longer get sent a P11D.
What does this mean for you:
If you’re an employee
You’ll see a line on your payslip referring to the perk you receive. You’ll pay tax on this amount every time you get paid by your employer and you won’t receive a P11D anymore as it is all dealt with in payroll. The benefit of this is you’ll spread the tax due over 12 months rather than having to pay a chunk in one go. It also means if you ever leave your employer you won’t need to chase them for a P11D months after you have left.
If you’re an employer
This will reduce the administrative burden for you. You’ll need to let your payroll team know in advance of the start of each tax year which perks you give to your team similar to preparing the P11D. These amounts are then added to your employees payslips and tax is applied each payrun. If you use Xero for your payroll the set-up process is straightforward.
Does that mean annual reporting goes away?
The requirement for an employer to still report the total amounts paid and pay Class 1A National Insurance via a P11D(b) by the July of each tax year remains although it is hoped that this will be removed by 2026.
What do I need to do next
We love being ahead of the game when it comes to digital reporting and we’d recommend getting set up for the upcoming 2024/25 tax year now, that way when the April 2026 payroll comes around we just push on as normal!
To get going for 2024/25 tax year you’ll need to register with HMRC by 5 April 2024. If you are already working with us then we can manage the switch for you. If you’re not then we can still help with that switch and getting your payroll working for you, fill in our form here.
