In this special update for National Payroll Week, we explore the payrolling of benefits, which is set to become mandatory in April 2026.
Benefit in Kind
First introduced by the UK Government in 2016, processing of employee benefits could be done directly through payroll instead of using a P11D form, but it was not mandated. The benefit of this is that the employee is taxed through the Pay As You Earn system each month, on the value of the benefits, rather than having a reduction in their tax code the following year.
Currently there are 2 ways of payrolling benefits. Submit a P11D form or do it through the payroll.
The most common payrolled benefits are:
• Company cars
• Health insurance
• Mobile phone allowances
• Private medical insurance
• Childcare vouchers or subsidies
• Travel expenses such as car fuel benefit
• Gym memberships
• Meals provided by the employer.
What’s changing?
Payrolling benefits are set to become mandatory in April 2026.
What does it mean?
It means all Benefit in Kind (with the exception of loans and living accommodation provided by you) must be reported and taxed through payroll.