Ryan Mackie

Payrolling Benefits in Kind


Payrolling benefits in kind means reporting employee benefits (like company cars or medical insurance) through the employer’s payroll. This allows any tax due on these benefits to be spread across the tax year through employees’ adjusted tax codes. If a benefit is payrolled, it doesn’t need to be included on a P11D form.

However, not all benefits can be payrolled. For example, employer-provided living accommodation and beneficial loans (interest-free or low-interest loans) must still be reported on a P11D form.

How to Start Payrolling

If you want to payroll benefits, you’ll need to register with HMRC before the start of the tax year you plan to begin.

What else do employers need to do?

Even if benefits are payrolled, employers must still:

  • Report all taxable benefits in summary form on the P11D(b).
  • Pay Class 1A National Insurance Contributions (NIC) on the total value of taxable benefits.

The deadline to file the P11D(b) and pay the Class 1A NIC is 6 July after the tax year ends.

Upcoming Changes

From 6 April 2026, payrolling benefits will become mandatory for all employers, except for living accommodation and beneficial loans (which can still be voluntarily payrolled). Employers also have the option to start early, from 6 April 2025, on a voluntary basis.

If you need assistance with payrolling benefits or ensuring compliance, contact payroll@mmgca.co.uk for expert support today.