How Do I Issue P11Ds — and What’s Changing With BIKs (Benefits in Kind)?

If you’ve ever felt a small shiver at the thought of “P11D season,” you’re not alone.

Traditionally, if you gave an employee something more than salary — a company car, private health cover, a perk here or there — you had to fill in a form called P11D at the end of the tax year. Everything was bundled up, sent to HRMC, and employees usually got a little surprise (in their tax code or Self-Assessment) the following winter.

But hang on — times are changing. Big time. Let’s walk through:

• What a P11D is
• When you need to file one (and its sibling, P11D(b))
• What’s happening to BIK reporting — and what you need to do to stay ahead

🧐 So — What Is a P11D (and Why Does It Exist)?

P11D is the form used to report benefits in kind (BIKs) and taxable expense reimbursements — things that count as employment income even though they’re not cash wages. GOV.UK+2Wikipedia+2

Typical examples: company cars, fuel, private medical insurance, interest-free or low-interest loans over a threshold, vouchers or non-cash goodies. GOV.UK+2FSB+2

If you use the old-school method (i.e. not “payrolling” the benefit), you must issue a P11D for any employee who received taxable benefits during the tax year. Then:

• Send a copy to HMRC
• Give a copy to the employee (so they know what they’ve been given)
• And complete a P11D(b) to declare the total value and calculate the employer’s Class 1A National Insurance Contributions (NICs) due on those benefits. GOV.UK+2GOV.UK+2

Deadlines:

• P11D + P11D(b) must be submitted to HMRC by 6 July after the end of the tax year. Employees must receive their copy by that date too. GOV.UK+1
• Class 1A NICs must be paid by 22 July (or 19 July if paying by cheque). GOV.UK+1

If you miss it — or send it late — penalties apply (yes, HMRC keeps a list). GOV.UK+1

🔄 But Wait — The Rules Are Changing. Big Time.

Because the payroll gods — sorry, HMRC — have decided that the P11D method is messy and delays tax collection.

From April 2027, most BIKs will need to be payrolled instead. That means:

• Benefits are taxed through your regular payroll system, using the same PAYE/RTI process used for wages. Bishop Fleming+2ICAEW+2
• Class 1A NICs will be collected in real time through payroll, rather than as a lump sum after the tax year. Bishop Fleming+2Bishop Fleming+2
• With payrolling done correctly, you won’t need to issue a P11D for those benefits — though a P11D(b) may still be required for any residual employer NIC liability. GOV.UK+2Grant Thornton UK+2

Important caveat: some benefits — such as employer-provided living accommodation or beneficial (low-interest) loans — are NOT mandatorily payrolled yet. For those, you may still need to use P11Ds. Bishop Fleming+2Bishop Fleming+2

So — for now — there’s a transition period (2025–2027) where you might use both systems: some benefits payrolled, some via P11D.

It’s messy. But manageable if you plan ahead.

🧩 What You Should Do Right Now (Especially If You’re a Business Owner or Payroll Service)

If you haven’t already — now’s the time to:

1. Check your payroll software: ensure it’s capable of handling BIK payrolling when the time comes. Some older or basic systems might not support the new reporting fields. GOV.UK+1
2. Register with HMRC (if you want to volunteer now rather than wait) for the payrolling benefits service before the start of a tax year. GOV.UK+1
3. Decide which benefits you’ll payroll — and which you’ll leave on P11D (loans, accommodation, or other complex ones may still need P11D). Bishop Fleming+1
4. Notify employees in writing about the change if you shift to payrolling: they’ll see amounts on their payslip instead of a surprise mid-year P800 or Self-Assessment letter. GOV.UK+2LLP Site+2
5. Prepare for Class 1A NIC calculations — whether monthly through payroll (when mandatory) or via P11D(b) after the year end. Grant Thornton UK+1

❤️ The Love Payroll Bit

At Love Payroll, we’re already preparing for the big switch. We’re sorting systems, checking software compatibility, and mapping out who gets what — all so our clients don’t have to suffer during “tax-code surprise season.”

We’ll help you choose between payrolling or P11D for your benefits, register you properly, run the numbers, notify your people, and handle the Class 1A NICs without messing up Christmas.

Because perks should feel like perks — not like panic in July.