P11D and Benefits in Kind: what to report and how

What are P11D forms?

A P11D is a form submitted to HMRC by employers to report certain non-cash benefits and expenses provided to employees or directors during a tax year, which haven't been included in their regular payroll. This form helps HMRC understand the additional taxable value an individual has received, allowing them to collect the appropriate income tax.

You also need to submit a P11D(b) form. This is a summary declaration that confirms all required P11Ds have been completed and declares the total Class 1A National Insurance Contributions (NICs) due on these benefits.

For the 2025/26 tax year, the deadline for filing P11D and P11D(b) forms is 6 July 2026. These forms must be submitted online, as paper forms are no longer accepted. You must also provide your employees with a copy of their P11D information by the same date.

Understanding Benefits in Kind (BiKs)

Benefits in Kind (BiKs), also known as 'perks' or 'fringe benefits', are non-cash benefits that employers provide to employees in addition to their salary. While not paid in cash, these benefits often have a taxable value, meaning employees pay Income Tax on them and employers pay Class 1A National Insurance.

Common Taxable Benefits

Many types of benefits need to be reported on a P11D:

• Company Cars and Fuel: If an employer provides a company car for private use, it's a taxable benefit. The taxable value depends on the car's list price (P11D value), CO2 emissions, and fuel type. For the 2026/27 tax year, electric vehicle BiK will increase to 4% (up from 3% in 2025/26), with petrol, diesel, and hybrid vehicles attracting higher rates, capped at 37%. If fuel is also provided for private mileage, there's an additional fuel benefit charge. For 2026/27, the car fuel benefit multiplier is £29,200.
• Private Medical Insurance: If your company pays for private medical insurance for an employee or director, this is a taxable benefit. The value to report is the amount paid by the employer.
• Loans to Employees: Interest-free or low-interest loans provided to employees can be a taxable benefit if the loan amount exceeds a certain threshold (currently £10,000).
• Living Accommodation: If an employer provides living accommodation, this is generally a taxable benefit.
• Vouchers: Vouchers that can be exchanged for goods or services are typically taxable.
• Other Assets: Assets made available for an employee's personal use, such as gym memberships or non-business expenses, also need to be reported.

Exemptions and Exclusions

Not all benefits are taxable or need to be reported. Key exemptions include:

• Trivial Benefits: Small, non-cash gifts to employees can be exempt if they meet specific conditions. Each benefit must cost £50 or less, not be cash or a cash voucher, not be a reward for work, and not be contractual. For directors of "close companies" (most small limited companies), there's an annual cap of £300 per director for trivial benefits. Trivial benefits are exempt from P11D reporting and will remain exempt from mandatory payrolling.
• Reimbursed Expenses: Expenses incurred wholly, exclusively, and necessarily for business duties do not need to be reported if reimbursed. Employers should have robust internal controls to ensure these expenses qualify.
• Other Exemptions: Certain other benefits are exempt, such as employer pension contributions (within limits), some childcare support, free or subsidised meals, a mobile phone provided mainly for work, and annual staff parties within cost limits.

How to report Benefits in Kind

P11D Submission Process

If you are not payrolling benefits, you must:

1. Identify all taxable benefits: Keep accurate records of all non-cash benefits and expenses provided to each employee and director throughout the tax year.
2. Calculate the cash equivalent: Determine the taxable value of each benefit.
3. Complete P11D forms: Fill out a separate P11D form for each employee or director who received taxable benefits.
4. Complete P11D(b) form: This form summarises the total Class 1A NICs due.
5. Submit online: Both P11D and P11D(b) forms must be filed online with HMRC by 6 July following the end of the tax year (e.g., 6 July 2027 for the 2026/27 tax year).
6. Provide copies to employees: Give each employee a copy of their P11D information by the 6 July deadline.

Payrolling Benefits

From 6 April 2027, payrolling of most Benefits in Kind (BiKs) will become mandatory. This means that income tax on benefits will be collected in real-time through your payroll, rather than reported annually on P11Ds.

For the 2026/27 tax year, employers could voluntarily register to payroll benefits by 5 April 2026. If you registered, you would include the taxable value of benefits in employees' monthly pay, deducting income tax through PAYE. Even if you payroll benefits, you still need to submit a P11D(b) and pay Class 1A NICs by the July deadline.

Tax implications for employers and employees

Employer

As an employer, you are responsible for paying Class 1A National Insurance Contributions (NICs) on the value of most taxable benefits you provide. For the 2026/27 tax year, the Class 1A NIC rate is 15% of the total benefit value.

The deadline for paying Class 1A NICs for the 2025/26 tax year is 22 July 2026 if paying electronically, or 19 July 2026 if paying by post.

Employee

Employees pay Income Tax on the cash equivalent of the benefits they receive. HMRC typically adjusts an employee's tax code to collect this tax, meaning they pay it through their salary over the following tax year. If benefits are payrolled, the tax is deducted in real-time through their monthly pay.

Common mistakes

• Missing the P11D deadline: Late submission of P11D forms can lead to penalties of £100 for every 50 employees per month.
• Incorrectly calculating benefit values: Errors in valuing benefits, especially complex ones like company cars, can lead to under- or over-reporting.
• Forgetting Class 1A NICs: Employers sometimes overlook the Class 1A NIC liability, which is separate from the employee's income tax.
• Not providing employees with P11D copies: Employees need their P11D information to check their tax code and complete their Self Assessment if applicable.
• Misclassifying trivial benefits: Gifts exceeding the £50 limit or those given as a reward for work are not trivial and become taxable.
• Not registering for payrolling benefits in time: If you wish to payroll benefits for a tax year, you must register with HMRC before the start of that tax year.