P11D and payrolling benefits in kind: what UK employers must change before April 2027

Every UK employer that provides taxable benefits knows the P11D. From 6 April 2027, however, payrolling benefits in kind become mandatory for company cars, vans, fuel and medical benefits. As a result, employers face a last full P11D cycle alongside a new real-time process. This guide explains the P11D deadline, the new rules and the steps to take now.

What is a P11D form?

A P11D is the annual form UK employers use to report taxable expenses and benefits for each employee. Alongside it, the P11D(b) declares the employer’s total Class 1A National Insurance bill. Typical entries include company cars, private medical insurance and beneficial loans. You file both after the tax year ends on 5 April.

For 2026/27, Class 1A National Insurance stands at 15% of the taxable value of most benefits. In turn, the employee pays income tax on the same value, usually through a tax code adjustment. Registration for voluntary payrolling in 2026/27 closed before 6 April 2026. Therefore, any benefit you did not register must go on a 2026/27 P11D.

When is the P11D deadline?

The P11D deadline is 6 July after the tax year ends. By then, you must file every P11D and the P11D(b), and give employees their copies. Class 1A National Insurance is then due by 22 July, or 19 July by cheque. For the 2026/27 tax year, the P11D deadline falls on 6 July 2027.

Missing the P11D deadline costs money. HMRC charges £100 per 50 employees for each month, or part month, that the P11D(b) is late. It also adds penalties and interest when payments arrive late. The GOV.UK deadlines for expenses and benefits list every date.

What you must do	Deadline after the tax year ends
Submit P11D forms and the P11D(b)	6 July
Pay Class 1A National Insurance	22 July (19 July by cheque)
Apply for a new PAYE settlement agreement	5 July
Pay tax and Class 1B National Insurance under a PSA	22 October (19 October by post)

What changes when payrolling benefits in kind becomes mandatory?

Payrolling benefits in kind means taxing benefits through each pay run, instead of reporting them once a year. In June 2026, HMRC confirmed a phased start from 6 April 2027. From that date, employers must payroll the most common benefits. They must also report Income Tax and Class 1A National Insurance on them in real time.

• Phase 1, from 6 April 2027: company cars, car fuel, vans, van fuel and employer-provided medical benefits.
• Phase 2, from April 2028: most other benefits in kind.
• Loans and living accommodation: outside the mandatory regime, although voluntary payrolling remains possible.

Employers do not need to register for phase 1. However, other benefits stay on the P11D for 2027/28 unless you payroll them voluntarily. HMRC opens registration for that voluntary route in November 2026. In addition, HMRC plans to publish final phase 1 guidance alongside the Autumn Budget 2026. Check the HMRC guidance on the phased introduction before you change software settings.

Where does a PAYE settlement agreement fit?

A PAYE settlement agreement (PSA) covers minor, irregular or impracticable benefits. Under it, the employer pays the tax and National Insurance in one annual payment. Covered items stay off the P11D and out of payroll. Instead of Class 1A, the employer pays Class 1B National Insurance. Staff events and occasional gifts are typical examples.

Once in place, a PSA continues until you or HMRC cancel it. Even so, you must report its value every tax year, even when that value is £0. Meanwhile, HMRC has launched a call for evidence on PSAs, so reform may follow. The GOV.UK guide to PAYE settlement agreements explains how to apply. Therefore, decide early which minor benefits belong in a PSA and which will run through payroll.

How should employers move from P11D to payroll?

Start by mapping every benefit you provide against the two phases. Next, confirm that your payroll software can handle phase 1 data and real-time Class 1A. Then plan for July 2027, when the last full P11D cycle overlaps with in-year reporting. Finally, explain the change to employees before their payslips change.

• Collect car data now, including list prices, CO2 emissions and fuel arrangements.
• Decide whether to payroll other benefits voluntarily in 2027/28.
• Budget for 2026/27 Class 1A in July 2027, alongside in-year Class 1A.

Foreign-owned employers face extra risk, because their UK payroll often runs from abroad. Still setting up? Read how to register as an employer with HMRC as a foreign company. For complex London workforces, our guide to keeping payroll administration clean at scale adds practical controls.

Moving talent across borders with clarity, compliance and trust

Payroll is where cross-border growth becomes real for every employee. Payrolling benefits in kind therefore turns reporting into a monthly discipline. Employers who prepare now avoid late P11D(b) penalties, Class 1A errors and confused staff.

As a global enabler for talent movement, Octagon Professionals has supported cross-border employers since 1987. Our HR experts run payroll administration with statutory reporting, benefits integration and payroll audits built in. As a result, we remove the administrative burden and keep every figure transparent. Meanwhile, you keep full control over salaries, benefits and working arrangements.

Ready to move beyond the P11D with confidence? Contact Octagon Professionals to prepare your UK payroll for April 2027.

Frequently asked questions

When is the P11D deadline for 2026/27?

Employers must submit 2026/27 P11D forms and the P11D(b) to HMRC by 6 July 2027. Employees must also receive a copy of their benefit information by that date. Class 1A National Insurance is then due by 22 July 2027, or 19 July 2027 by cheque.

Is the P11D being abolished?

Not straight away. From April 2027, company cars, vans, fuel and medical benefits move into payroll, so they leave the P11D. Most other benefits follow from April 2028. However, loans and living accommodation stay outside the mandatory regime, so some employers will still file P11Ds after that.

What benefits must be payrolled from April 2027?

From 6 April 2027, UK employers must payroll company cars, car fuel, vans, van fuel and employer-provided medical benefits. Employers then report Income Tax and Class 1A National Insurance on these benefits in real time. Employers do not need to register with HMRC for this first phase.

What is a PAYE settlement agreement used for?

A PAYE settlement agreement lets an employer settle the tax on minor, irregular or impracticable staff benefits. Typical examples include staff events and occasional gifts. The employer pays the tax and Class 1B National Insurance in one annual payment, due by 22 October. These items stay off P11D forms.