Employer year-end compliance reporting

Reporting employee benefits and expenses to HMRC

As the tax year draws to a close, employers are required to report and pay employment taxes. Employer year-end compliance reporting for employee benefits and expenses can be complex with various requirements and deadlines. Employee benefits are reported to HMRC via P11D or PAYE settlement agreement (PSA), among other reports.

P11Ds

Employers use P11D forms to report certain expenses and benefits they provide to their employees. These include company cars, private medical insurance, and certain types of accommodation.

Employers must provide employees with a copy of their P11D by 6 July following the end of the tax year. In addition, employers must submit a P11D(b) to HMRC by the same deadline. The P11D(b) is a summary of all the expenses and benefits that have been reported on P11Ds or payrolled, and it is used to calculate the Class 1A national insurance contributions (NICs) that are due. Starting from 6 April 2025, the rate at which employers pay Class 1A National Insurance Contributions (NICs) will increase to 15%. It’s important to remember that this change applies only to the 2025/26 tax year. For the 2024/25 tax year, the P11Ds and PSA will still be based on the current rate of 13.8%.

It is worth noting that if an employer has a PSA in place for certain expenses and benefits, they do not need to report these on P11Ds.

Payrolling benefits

From April 2026, the P11D process is changing and moving towards the mandatory payrolling of benefits. This is the last year for P11Ds, unless you provide living accommodation or beneficial loans, for which there should be a shorter P11D. The registration part is too late now for 2025/26, and HMRC is planning on registering employers automatically from April 2026. The process might change, and HMRC will provide more details later in the year. We have created a list of FAQs on this here, and you can find out more about how we can assist with this here.

Identify which benefits will be payrolled, calculate their taxable value, and add this value to employees’ taxable pay. Employers must then ensure correct deduction of tax and NICs through the payroll.

When registered, employers must payroll benefits throughout the tax year and report the payrolled benefits on their full payment submission (FPS) each time they run their payroll.

PAYE settlement agreements

A PAYE settlement agreement (PSA) is an agreement between an employer and HMRC that allows the employer to settle tax liabilities on behalf of their employees for certain expenses and benefits.

The deadline for applying for a PSA for the 2024/25 tax year is 5 July 2025. However, if you apply before the deadline but after the tax year ends, you must still use the P11D process to report certain expenses and benefits. This applies to those already included in the employee’s tax code or in your employee’s tax and NI deductions through PAYE.

After agreeing on a PSA, the employer reports the relevant expenses and benefits on their PSA return. The employer must pay any tax and national insurance owed under a PSA by 22 October after the tax year the PSA applies to (19 October if paying by post). The rate at which employer Class 1B NICs are due on the cost of the benefit is 13.8% for the 2024/25 tax year. This rate will increase to 15% for future years.

Other reporting requirements for employer year-end compliance

In addition to PSAs and P11Ds, there are a number of other reporting requirements that employers must fulfil at the end of the tax year. These include:

Reporting payroll information to HMRC through real time information (RTI). Complete this on or before the employees pay day
Paying any outstanding PAYE tax and national insurance contributions by 22 April (or 19 April if paying by cheque)
Report any taxable expenses and benefits not included in a PSA or P11D on the employee’s form P60. This must be provided to the employee by 31 May following the end of the tax year
If you have short term business visitors from overseas and have an Appendix 4 in place. You must provide a report of all such visitors by 31 May
Report any share transactions or approved share schemes to HMRC by 6 July

Conclusion

The end of the tax year keeps employers busy with reporting and paying various employment taxes. Employers stay busy at the end of the tax year, reporting and paying various employment taxes. By staying on top of these requirements, employers can ensure that they are compliant with their tax obligations and avoid any potential penalties or fines.