It was confirmed in the Budget that payrolling benefits will become mandatory from April 2026. The countdown has begun and employers now have just 17 months to transition from P11D reporting to payrolling benefits when it becomes mandatory from 6 April 2026.

This significant change aims to simplify employment tax by allowing employees to pay tax on benefits within the same tax year they’re provided, replacing complex tax code adjustments tied to previous years. By getting rid of P11D reporting and replacing it with payrolling benefits the intention is to streamline this area of employment tax.

Not all benefits can be payrolled

Currently, P11Ds are required to report benefits like accommodation and loans. But, from April 2026, employers will have the option to voluntarily payroll these benefits, eliminating the need for P11D reporting altogether.

Preparing your teams for the change

This shift will require coordinated efforts across Employment Tax, Human Resources, Payroll, and benefit providers to ensure a smooth, compliant transition.

Preparing your employees for the change

With payrolling benefits, your employees will see changes in how their taxes are collected. Communicating these changes is essential to avoid misunderstandings and ensure employees understand how benefits will appear on their payslips and impact their tax withholdings.

Start planning for mandatory Payrolling Benefits in April 2026

To avoid a last-minute rush, we recommend beginning your payrolling benefits project now. Starting as early as April 2025 will give your team valuable experience and provide time to refine processes before the 2026 deadline.

How PSTAX can support your Payrolling Benefits Project

PSTAX offers comprehensive support and training for transitioning to payrolling benefits. Our training covers:

• Overview of Payrolling Benefits and its replacement of P11Ds
• Eligible Benefits for payrolling and how to register with HMRC
• Benefit Valuation, including benefits provided through salary sacrifice schemes
• Employee Communications to ensure clarity and understanding
• Mid-Year Corrections and how to pay Class 1A NICs
• Practical Examples to help your team confidently manage payrolling

Our team can also assist with HMRC registration and provide employee communication templates to make the transition smoother.

Contact us to start your Payrolling Benefits transition

Take proactive steps toward compliance. Get in touch with PSTAX to discuss how we can support your team in implementing payrolling benefits for a seamless transition.

Contact us