Changes to Reporting of Employment Benefits in 2026


HMRC has announced via a policy paper on tax simplification measures, that the reporting and payment of income tax and Class 1A National Insurance on benefits in kind (BIK) will have to be made through payroll software from April 2026.  This is part of HMRC’s plans to move to a digital first tax authority but the timetable for the rollout is tight with just over two years to develop the software and conduct testing.

HMRC has said it will engage with stakeholders to discuss the proposals to ‘inform design and delivery decisions, and draft legislation will be published later in the year as part of the usual tax legislation process’.  HMRC will also work with industry experts to produce guidance, which will be made available in advance of 2026.

Although payrolling BIK removes the need for employers to submit forms P11D for these BIK, class 1A NIC currently still needs to be reported and paid separately to HMRC using form P11D(b).

As we learn more about these proposed changes we will inform clients.

Castletons Accountants

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