As the 6 July deadline approaches, it is important to be aware of the revised reporting requirements for Class 1 National Insurance Contributions (NICs) on benefits in kind (BIKs).
Employers who provide perks such as private healthcare, living accommodation, travel expenses, and company cars need to account for additional NICs either through payroll or by filing a P11D form.
There are impending changes that will streamline how BIKs are reported on P11D forms for each employee who receives taxable benefits. Employers currently have the choice to handle BIKs directly through their payroll—a process known as ‘payrolling’—which needs to be arranged before the start of the tax year.
If opting not to use payrolling, P11D forms must be submitted electronically by 6 July following the end of the tax year. Employers are also required to report the amount of Class 1A NICs on a P11D(b) form and make sure that payments are sent to HMRC by 22 July.
Failure to meet the submission deadline can lead to penalties of £100 per 50 employees for each month the forms are late. It is necessary to report all taxable benefits, except for exempt expenses like business travel, business entertainment, and uniforms under certain conditions. Trivial benefits that are not taxable do not require reporting.
Starting from April 2026, reporting and paying Income Tax and Class 1A NICs on BIKs through payroll software will become compulsory. This change aims to reduce the administrative load associated with P11D forms and simplify compliance.
If you have any questions regarding P11D reporting or other payroll processes, please contact us for assistance.
