Can you payroll benefits in kind?

It is possible to payroll benefits and expenses, with the exception of employer provided living accommodation and interest free and low interest loans.  

You must register with HMRC’s online service for the tax year. Whilst it is too late to register for the 2024/25 year, registering before 5th April 2025 will enable you to payroll benefits for the 2025/26 year.  

Payrolling benefits means that you won’t need to prepare and submit form P11D, as long as all benefits are included in the registration process. Once you have registered, you must provide written notice to your employees explaining that you’re payrolling and what it means for them. 

The employee’s tax code will automatically change to adjust for this benefit. 

You will still need to work out any Class 1A National Insurance Contributions (NIC) and submit form P11D(b) by 6th July each year. It’s important to keep a record of benefits you give to employees so you can accurately report and pay the NIC. 

Find out more about P11Ds in our article. 

Mandatory payrolling 

From April 2026 it will be mandatory to payroll benefits. You may therefore want to consider voluntarily payrolling benefits before the mandatory rules come into effect. Set a reminder now to register before 5th April 2024. 

We can help 

If you would like payroll or benefits in kind support, speak to our team. Call 01423 871 870 or use our online contact form. 

Date published 3 May 2024

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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