The end of the P11D compliance form – or is it?

Original content produced by BDO.

Is the end in sight for the P11D compliance form?

It is moving in that direction and employers who are still using the P11D form will need to start preparing for the changes.

The latest update from HMRC declares that payrolling benefits will become mandatory from April 2026. Read more below. HMRC confirmed that they will work with ‘industry experts’ to produce guidance. The Payroll governing bodies should be high on this list of experts, as their job is about to get even more complicated.

Although HMRC have hinted at this move for several years, there remains some benefits in kind that currently cannot be payrolled because of their complexity, including accommodations and beneficial loans. Whether these will have to be payrolled from 2026, and just how that can be achieved in practice, remains to be seen.
There are other practical areas that need clarification, including the following:

• Under current UK tax law, employers cannot deduct more than 50% tax from employees’ salaries. What do employers do when this blocks full payrolling for an employee?
• What happens to the current requirement that employers must notify HMRC of the Class 1A liability on employee benefits - the P11D(b)?
• Will HMRC be able to change its systems to ensure that the tax code of everyone who currently has a BIK restriction is updated correctly for 2026/27?

Although the proposed changes are two years away, and the employer year-end filing season for 2023/24 is approaching fast, employers may wish to start considering now how they will move to payrolling of benefits and the steps needed to get there by 2026.


Contact our team for more information or advice in guiding you through the changes:
Geraldine Browne | Kiera Scott | Rachel Trainor