Payrolling of Benefits – Are you prepared?

This means that the current system of completing annual forms P11D for benefits in kind (BiK), will instead be replaced by monthly reporting through payroll.  Employers must ensure they are prepared for this significant change, as it will require changing the systems and procedures that are currently in place, to ensure that the correct information is reported as part of their payroll.

Although the deadline for mandatory payrolling of benefits is a little while away, employers may want to consider voluntarily starting the process a year earlier, from April 2025.

Why should I start a year earlier?

We anticipate that many benefits and service providers will be inundated with information requests ahead of 6 April 2026, which could create challenges for employers when meeting their real time reporting obligations.

Registering a year ahead of schedule will ensure a smoother interaction for all stakeholders, including HR teams, payroll, benefits providers and most importantly,  employees.

The change should not be underestimated and will require a well-structured plan to help ensure that:

• Payroll providers have sufficient time to transition across to the payrolling of benefits.
• Data is obtained from benefit providers.
• Good quality staff communications are provided.
• Systems are in place to help ensure the valuation of the taxable benefits provided is updated regularly.

The following are examples of the issues that need to be carefully considered, when ensuring a smooth transition to the payrolling of benefits:

• Payroll – what changes need to be made to the provision of information so that benefits can be successfully ? Please note that not all payroll providers currently have the facility to payroll benefits.
• Employee communications – how can these changes be best communicated to employees?
• No form P11D – while P11Ds will no longer be submitted to HMRC, employers are still required to provide employees with details of the benefits provided and the value of those benefits – how can this be done successfully?
• Data gathering – under the new changes, employers will need to review the value and provision of benefits in real time. This will require the careful tracking of leavers and joiners as well as variations of cover, such as for medical or dental insurance.

At haysmacintyre, our Employment Taxes team are on hand to help you manage the move across to payrolling of benefits. Our services can be tailored to meet your needs from a fully managed project, to limited assistance.

For further information please contact Joanne Hennessy Employment Tax Senior Manager.