The end of the P11D: payrolling benefits in kind from April 2027
From April 2027, company cars, vans, fuel and medical cover must be taxed through payroll each month. Most other benefits follow in 2028. What employers need to do first.
Today most benefits in kind are reported once a year, on around 3.5 million P11D forms, and the tax is collected later through adjustments to tax codes. Employees often find out what they owe long after the year in question. Mandatory payrolling changes that: the taxable value of each benefit is added to pay each period, and tax is deducted in real time.
The timetable
- 5 Nov 2026Registration for voluntary payrolling reopens, including Class 1A National Insurance
- 6 Apr 2027Company cars, car fuel, vans, van fuel and employer-provided medical benefits must be payrolled
- 6 Apr 2028Most remaining benefits must be payrolled
- LaterEmployer-provided loans and accommodation, timing to be confirmed
What it means in practice
Payroll needs to know the cash equivalent of each benefit before the year starts and whenever it changes: a new car, a change of fuel arrangement, a new joiner on the health scheme. Information that used to be gathered once a year now has to flow from HR and fleet records to payroll as it happens.
Getting ready
- List every benefit you provide, who gets it and how its value is worked out.
- Check your payroll software supports payrolled benefits and Class 1A.
- Agree who tells payroll about changes, and by when each month.
- Tell employees early: take-home pay will change, even if their total tax does not.
This insight is general information, not advice for your circumstances. Talk to us before acting on it.