What does HMRC’s new benefit in kind reporting mean for your payroll system? 

Traditionally, business owners have relied on forms like the P11D to report benefits in kind (BiKs).  

So, what if that process was no longer an option? What if BiK reporting had to be integrated into your payroll system in real-time? 

That’s exactly the change HM Revenue & Customs (HMRC) is introducing in April 2026. 

Real-time BiK reporting is set to replace the old systems, raising a fundamental question – is your payroll system ready? 

Why the change? 

Think about the inefficiencies of the current system. Relying on year-end forms means delays, inaccuracies, and potential compliance risks.  

Real-time reporting promises streamlined tax administration and fewer surprises for employers and employees.  

Will this solve all problems, or introduce new ones? 

What are the key changes? 

• Most BiKs will require real-time reporting – Private medical insurance, company cars, and similar perks will need to be reported through payroll software as they arise. The P11D, in most cases, will no longer suffice. 

• Exceptions remain – Employment-related loans and accommodation can still be reported via a modified P11D if real-time reporting is not feasible, at least for now.  

• Goodbye P46 (Car) – For businesses running company car schemes, traditional forms will give way to real-time payroll updates. 

What does this mean for payroll systems? 

Can your payroll handle the increased detail and precision real-time reporting demands? 

Will your team be ready to adapt to these changes without errors creeping in? 

Real-time reporting moves the focus from year-end corrections to accurate, timely data entry throughout the year.  

That is a significant operational change for many businesses. 

How should businesses prepare? 

Consider these steps: 

• Update your payroll software – Have you confirmed with your provider that it can support the new requirements? If not, why wait? 

• Train your team – Do they understand the nuances of BiK reporting under the new system? Without proper training, the risk of errors increases. 

• Audit your BiK packages – Are your offerings competitive and compliant? Now is the time to review. 

• Plan for the year-end process – Some BiK values may still need adjustments at year-end. Do you have a strategy in place? 

Is this an opportunity or just more admin? 

While these changes might feel overwhelming, they represent an opportunity to modernise payroll systems, improve compliance, and reduce the burden of year-end submissions.  

Real-time reporting could ultimately simplify your processes, but only if you are prepared. 

So, what is your next move? Will you adapt early and embrace the efficiencies, or wait and risk falling behind? 

Our team of tax and payroll experts is ready to help you. Get in touch today.