From 6 April 2026 the payrolling of benefits in kind (BIKs) will be mandatory for all employers.
These changes will mean that the tax on employees’ taxable benefits will be deducted directly from their salary in each pay period, instead of through Self Assessment or via an adjustment in their PAYE tax code.
There are two exceptions:
> interest-free and low-interest loans; and
> living accommodation provided by the employer
KEY POINTS
No more P11D forms
As the majority of BIKs will be payrolled, for many employers there will no longer be a need to submit P11D forms to report benefits at the end of the tax year. Reporting will only be required for employment-related loans and employer-provided accommodation.
Real-time tax deduction
The tax on benefits in kind will be automatically deducted from employees’ salary throughout the year, ensuring that accurate tax payments are made. Additionally, Class 1A and Class 1 National Insurance contributions will need to be reported and paid in each pay period.
Impact on employees’ payslips
Employees will see a separate line on their payslips that will detail the taxable value of their benefits in kind.
Action for employers
It is recommended that employers review the current benefit in kind package offered to their employees so that they understand which items will be subject to payrolling from 6 April 2026.
If we manage your payroll, you may also need to implement new or additional systems and procedures to provide us with the necessary benefit in kind information.
If we do not manage your payroll, you will need to provide the relevant information to whoever deals with your it so that the correct benefits in kind can be taken into account.
Contact
If you would like to discuss your situation with our experts, please call our Leicester office on 0116 254 9262, or Loughborough office on 01509 263500. Alternatively, our contact form is here.