If you provide employees with extra benefits on top of their salary, P11D and benefits in kind rules may apply. Benefits in kind can include things like company cars, private medical insurance, accommodation and low-interest loans, and some of these need to be reported to HMRC.
A P11D is one of the main ways employers report taxable benefits that have not already been dealt with through payroll. This guide explains which benefits you need to report, the main deadlines and how Class 1A National Insurance works.
The rules are also changing. From April 2027, some common benefits, including company cars and employer-provided medical benefits, will move to mandatory payroll reporting, so employers will need to update their processes.
Key facts about P11D and benefits in kind
- A P11D reports certain taxable benefits and expenses provided to an employee or director.
- You normally need a separate P11D for each employee with benefits that need year-end reporting.
- A P11D(b) reports the total Class 1A National Insurance you owe on relevant benefits.
- For the 2026/27 tax year, P11Ds and the P11D(b) are normally due by 6 July 2027.
- Class 1A National Insurance on benefits is 15% in 2026/27.
- From April 2027, company cars, car fuel, vans, van fuel and employer-provided medical benefits will move to mandatory payroll reporting, according to GOV.UK.
For the full year-end process, see Factorial’s payroll year-end checklist.
What is a P11D?
A P11D is a form used to report certain taxable benefits and expenses that you provide to employees or directors.
These are normally benefits they receive in addition to their usual salary.
For example, imagine you pay an employee a salary and also provide private medical insurance. Their salary goes through normal payroll. If the medical insurance has not been payrolled, you may need to report its taxable value separately on a P11D.
Under the current system, employers usually have to report employee expenses and benefits to HMRC and pay the correct tax or National Insurance on them. The exact rules depend on the type of benefit.
Put simply:
Payroll covers normal pay and deductions.
A P11D covers certain taxable benefits that have not already been dealt with through payroll.
What are benefits in kind?
A benefit in kind, often shortened to BiK, is a benefit an employee receives from their employer in addition to normal pay.
Common examples include:
- a company car
- private medical insurance
- fuel for private journeys
- accommodation
- interest-free or low-interest loans
- certain personal bills paid by the company
A benefit in kind does not automatically mean there is extra tax to pay. Some benefits are exempt from tax, while others have specific rules.
The tax treatment can also depend on how the benefit is provided and how the employee uses it.
For example, a company car that an employee can use privately is normally treated differently from equipment that is only provided so they can do their job.
For a broader look at employee perks, see Factorial’s guide to fringe benefits.
Who needs a P11D?
You may need to complete a P11D for an employee or director if you gave them a taxable benefit or expense that has not already been dealt with through payroll or another approved method.
You do not automatically need to give every employee a P11D.
For example:
- An employee who only receives their normal salary will not normally need one.
- An employee with a taxable company benefit that has not been payrolled may need one.
- An employee whose relevant taxable benefits have already been correctly payrolled may not need a P11D for those benefits.
The important thing is to review the benefits each employee received during the tax year and check how they were handled.
What benefits do you have to report?
Different benefits have different tax rules, but these are some common examples employers may need to report.
| Benefit | What you may need to do |
|---|---|
| Company car available for private use | Report the taxable car benefit if it has not been payrolled |
| Fuel for private journeys | Report the taxable fuel benefit where required |
| Private medical insurance | Report the taxable value if it has not been payrolled |
| Low-interest or interest-free employee loan | Report if the loan creates a taxable benefit |
| Employer-provided accommodation | Report if it is taxable and no exemption applies |
| Assets provided for private use | Report the taxable value where required |
| Personal bills paid by the employer | Check the tax and NI rules for how the bill was paid |
| Some relocation costs | Report any taxable amount that is not covered by an exemption |
For example, under the current rules, a company car available for private use normally needs to be reported if it has not already been dealt with through payroll. The employer can also have Class 1A National Insurance to pay on the benefit.
HMRC has detailed rules for individual types of benefits, so it is worth checking the specific benefit rather than assuming everything works in the same way.
Which benefits do you not have to report?
Not every employee perk needs to go on a P11D.
Some benefits are exempt, which means you normally do not have to report them or pay tax or National Insurance on them.
Trivial benefits
A benefit can normally count as a trivial benefit if:
- it costs you £50 or less
- it is not cash or a cash voucher
- it is not a reward for the employee’s work or performance
- it is not part of their contract
If these conditions are met, you usually do not need to report the benefit to HMRC.
For example, giving an employee a £30 birthday gift could qualify.
Giving them the same £30 gift because they reached a sales target would not normally qualify, because it is a reward for their work.
Different limits apply to directors of some close companies.
Some work expenses
Expenses that employees need to do their jobs can also be exempt if they meet HMRC’s rules.
This can include certain business travel costs and other genuine business expenses.
Keep records showing what the expense was for and why it qualified for the exemption.
Staff parties and events
Some annual staff events can also be tax-free.
The exemption can apply when an annual event is open to employees and the total cost is £150 or less per head.
The £150 figure is an exemption limit, not an allowance. If an event is not covered by the exemption, you may need to report the full taxable cost rather than simply the amount above £150.
What is the difference between P11D and P11D(b)?
A P11D and P11D(b) do different jobs, even though their names are very similar.
| P11D | P11D(b) |
|---|---|
| Reports benefits for an individual employee or director | Reports the employer’s total Class 1A National Insurance |
| You may need one for each employee with reportable benefits | You normally submit one for the employer |
| Shows details of taxable benefits | Shows how much Class 1A NI you owe |
For example, imagine you provide taxable private medical insurance to five employees and it has not been payrolled.
You may need to report the benefit for each employee.
You then use the P11D(b) to report the total Class 1A National Insurance you owe on relevant benefits.
What is Class 1A National Insurance?
Class 1A National Insurance is an employer National Insurance charge on many taxable benefits in kind.
It is different from the normal employee National Insurance deducted from wages.
For the 2026/27 tax year, the Class 1A rate on expenses and benefits is 15%.
For example, if an employee receives a taxable benefit worth £1,000:
£1,000 x 15% = £150
You would have £150 of Class 1A National Insurance to pay on that benefit, assuming the standard Class 1A rules apply.
The employee may also have Income Tax to pay on the taxable value of the benefit.
The important point is that Class 1A National Insurance is an employer cost. You do not simply deduct it from the employee’s salary.
When is the P11D deadline?
P11Ds are normally due by 6 July after the end of the tax year.
For the 2026/27 tax year, which ends on 5 April 2027, the main deadlines are:
| Task | Deadline |
|---|---|
| Report relevant expenses and benefits | 6 July 2027 |
| Give employees a copy of their benefit information | 6 July 2027 |
| Report total Class 1A NI through P11D(b) | 6 July 2027 |
| Pay Class 1A NI electronically | 22 July 2027 |
| Pay Class 1A NI by cheque | 19 July 2027 |
These are HMRC’s standard year-end deadlines for expenses and benefits. If your P11D(b) is late, HMRC can charge £100 for every 50 employees, or part of 50, for each month or part-month it is late. You can also face interest and penalties for paying Class 1A National Insurance late.
That is why P11D reporting should be part of your normal payroll year-end checklist.
How do employers submit a P11D?
P11Ds are normally submitted to HMRC online.
Before you submit them, make sure you have checked:
- which employees received taxable benefits
- what each benefit was
- the correct taxable value
- whether the employee contributed towards the cost
- whether an exemption applies
- whether the benefit has already been payrolled
HMRC’s reporting rules depend on the type of benefit, so it is important to keep clear records throughout the year rather than trying to collect everything just before the deadline.
For a wider explanation of how payroll reporting works, see Factorial’s PAYE for employers guide.
What does payrolling benefits in kind mean?
Payrolling a benefit means dealing with its Income Tax through payroll during the year instead of waiting to report it on a P11D after the tax year ends.
For example, if you payroll private medical insurance, the taxable value of that benefit is included when payroll calculates the employee’s Income Tax.
For the 2026/27 tax year, employers that registered to payroll benefits before the deadline can continue using the current voluntary system. Registration for new employers wanting to payroll benefits in 2026/27 closed on 5 April 2026.
If a benefit has been properly payrolled under the current system, you normally do not report the same benefit again on the employee’s P11D.
However, there can still be separate Class 1A National Insurance reporting responsibilities.
This system is about to change significantly.
What is changing with benefits in kind from April 2027?
From 6 April 2027, employers will have to payroll some common benefits in kind, according to HMRC.
The first phase covers:
- company cars
- car fuel
- vans
- van fuel
- employer-provided medical benefits
Instead of waiting until the end of the year to report these benefits on a P11D, you will report their taxable values through the Full Payment Submission (FPS) used for payroll. An FPS is the regular report you already send to HMRC when you pay employees.
This means the Income Tax and Class 1A National Insurance linked to these benefits will be reported during the tax year rather than being left entirely to the year-end process.
What happens from April 2028?
From April 2028, mandatory payrolling is planned to extend to most remaining benefits in kind.
Employer-provided loans and accommodation are excluded from this April 2028 mandation for now, with their future mandatory treatment to be confirmed later. Employers will be able to pay for non-mandatory benefits such as loans and accommodation voluntarily from April 2027. HMRC has also confirmed specific arrangements for some globally mobile employees.
What should employers do now?
If you provide benefits to employees, start preparing before April 2027.
You should:
- make a list of all benefits you provide
- check which ones will become mandatory to payroll
- speak to your payroll software provider
- make sure HR, payroll and finance share benefit information quickly
- check how you calculate taxable benefit values
- review who is responsible for benefit reporting
- train anyone involved in payroll or benefits administration
The biggest change is timing. Under real-time reporting, you will need accurate benefit information during the tax year, rather than collecting everything after year-end.
What records should employers keep about benefits in kind?
You should keep clear records of the benefits and expenses you provide.
These should include information such as:
- who received the benefit
- what the benefit was
- when it was provided
- how you calculated its taxable value
- what it cost
- whether the employee contributed towards it
- whether an exemption applied
- how you reported it
Good records make it much easier to complete P11Ds correctly and answer employee questions.
They will also become more important when benefits move into real-time payroll reporting, because HR, finance and payroll will need accurate information sooner.
A simple P11D checklist for employers
Before finishing your expenses and benefits reporting, check:
- Who received benefits? Identify all employees and directors who received them.
- Are the benefits taxable? Check whether an exemption applies.
- Were any benefits payrolled? Avoid reporting the same benefit twice.
- Who needs a P11D? Identify employees with benefits that still require year-end reporting.
- Are the values correct? Check the correct HMRC valuation rules.
- Did employees pay towards anything? Include contributions where relevant.
- Do you need a P11D(b)? Work out your Class 1A National Insurance.
- Have employees received their information? Provide it by the deadline.
- Have you planned the Class 1A payment? Make sure HMRC receives it on time.
- Are you ready for April 2027? Check which benefits will move into payroll.
For more information on the wider process, our payroll explained guide covers the basics of UK payroll.
Make benefits and payroll easier to manage with Factorial
Managing benefits in kind can involve several teams. HR may know which employee has received a benefit, finance may hold the invoice and payroll needs the correct information to handle the tax.
When that information is spread across spreadsheets, emails and separate systems, it is much easier for something to be missed.
Factorial is an AI business management platform that brings HR, finance and IT together in one place. You can use Factorial to organise employee information, expenses, payroll changes and documents so teams can work from the same information.
That will become even more useful as benefits in kind move towards real-time reporting. Payroll teams will need benefit information sooner, and keeping HR and finance data connected can help reduce manual work and missing information. Explore Factorial’s payroll management software to see how you can simplify payroll preparation. Request a free demo and get a personalised quote that is tailored to your organisation!
FAQs about P11D and benefits in kind
A P11D is used to report certain taxable benefits and expenses provided to an employee or director that have not already been dealt with through payroll or another approved method.
A P11D is only needed when an employee has benefits or expenses that require P11D reporting. Employees without reportable benefits do not need one.
P11Ds are normally due by 6 July after the end of the tax year. For the 2026/27 tax year, the deadline is 6 July 2027.
A P11D reports taxable benefits for an individual employee, while the P11D(b) reports the employer's total Class 1A National Insurance on relevant benefits.
The P11D is not disappearing completely from April 2027. Company cars, car fuel, vans, van fuel and employer-provided medical benefits will move to mandatory payroll reporting first. Most other benefits are planned to follow from April 2028, while mandatory payrolling of loans and accommodation will be confirmed later.
