Payrolling benefits in kind
Get ahead of the deadline and avoid problems later
From April 2026, you’ll need to include employees’ benefits in kind in your payroll
Including employee benefits in your payroll is good news for your workload. But it’s important to get the details right.
The changes that will come through in April 2026 will eventually save you time and effort – but for now, there’s a lot to consider. It’s a good idea to start as soon as you can.
It’s likely you provide at least some employees with benefits in kind. From obvious costs like private medical cover or a company car, to simpler things like uniforms or professional fees, there are more than 50 benefits and expenses listed on the HMRC website – each with its own rules. And the growth of home and hybrid working has made the picture more complicated still.
When you payroll these benefits – instead of filling out a P11D and having HMRC collect the tax and NIC later – it’s faster and cleaner. Less paperwork for you, and your employees don’t get an extra bill.
But it’s important to manage the details. A small mistake can quickly add up in costs or penalties if it’s not noticed, or applies to many people. Which could be an issue where your benefits change from month to month: joiners and leavers, family upgrades to medical cover, childcare changes, and more.
That’s where an experienced guide can give you confidence. We know the territory, and the questions to ask, so you’re always compliant and in control.
For a smoother handover, start now
You can already payroll most benefits in kind on a voluntary basis. The sooner you start, the more time you have to communicate the changes to your employees, and make the switch at a comfortable pace.
Asking the right questions
Setting up your benefits in kind payroll is easier when you have experience of handling every kind of benefit and expense. We’ll discuss the following questions, and more, so you know there are no hidden issues which could become problems later. And we’ll keep you updated as the legislation evolves.
Keeping your people informed
As with any change affecting pay, the right communications are essential to keep your employees engaged and informed.
In particular, it’s important to support employees who are used to paying by P11D, as the switch to PAYE could affect their cashflow in the short term. Giving people clarity about the figures, and plenty of time, makes a big difference.
Naturally, we’ll help you provide those calculations, and explain the benefit of the change to your people.
Get ahead of the deadline
Let’s arrange an initial conversation, and get you on the road to compliance.