Benefits in kind and P11D explained (2026/27)
Give an employee anything more than straightforward pay — a company car, private medical cover, a gym membership — and you've probably created a "benefit in kind". Benefits are taxable, they carry an employer National Insurance charge, and reporting them has its own forms and deadlines. Here's how it all fits together for 2026/27, plus the big change coming in 2027 that every employer should be planning for now.
What is a benefit in kind?
A benefit in kind (BiK) is something of value an employee or director receives from their employment that isn't part of their normal taxable cash pay. Because it still has value, HMRC treats most benefits as taxable — the employee pays Income Tax on the "cash equivalent" of the benefit, and the employer pays National Insurance on it too.
Some things are specifically exempt (for example, certain trivial benefits, employer pension contributions and some workplace facilities), but the default position is that a benefit is taxable unless an exemption applies.
Common benefits in kind
- Company cars and vans — usually the largest BiK, valued using the car's list price and CO₂-based percentages.
- Car and van fuel provided for private use.
- Private medical and dental insurance.
- Interest-free or low-interest loans above a set threshold.
- Living accommodation provided by the employer.
- Gym memberships, professional subscriptions and similar perks that aren't exempt.
The P11D and the P11D(b)
Where benefits aren't being taxed through payroll (see below), the employer reports them after the tax year ends using two forms:
- P11D — one per employee, listing the benefits they received and the cash equivalent of each. The employee uses this to check their tax; HMRC usually collects the tax due via a change to their tax code.
- P11D(b) — the employer's declaration of the total Class 1A National Insurance due on all those benefits across the workforce.
Class 1A NIC for 2026/27: employers pay Class 1A National Insurance on most taxable benefits at 15% of the total cash equivalent. This is an employer-only charge — there's no employee NI on benefits reported this way.
The deadlines that matter
For the 2025/26 tax year (which ended on 5 April 2026), the key dates are:
| What | Deadline |
|---|---|
| Submit P11D and P11D(b) to HMRC | 6 July |
| Give employees a copy of their P11D | 6 July |
| Pay the Class 1A National Insurance | 22 July (electronic; 19 July if paying by post) |
Miss the 6 July filing date and penalties can build up month by month, so it pays to have the figures ready well before the deadline. Late payment of the Class 1A NIC can attract interest too.
Payrolling benefits — and why it's about to change
Instead of reporting benefits on a P11D after the year, many employers already payroll them: the taxable value is added to the employee's pay each period so the Income Tax is collected in real time, and there's no P11D for those benefits. The employer still has to account for Class 1A National Insurance, and currently registers to payroll benefits before the start of the tax year.
This is becoming mandatory. HMRC has confirmed that payrolling of benefits in kind will be mandatory from 6 April 2027, introduced in phases:
- From April 2027 (Phase 1): company cars, car fuel, vans, van fuel and employer-provided medical benefits must be payrolled, with Class 1A NIC reported and paid in real time through the payroll.
- From April 2028 (Phase 2): most remaining benefits are expected to come in. Certain items — notably employment-related loans and living accommodation — are set to stay outside the mandatory regime for now and remain available to payroll voluntarily.
Plan ahead: the mandation date was originally proposed for April 2026 and has since been deferred to April 2027. Timelines and the detailed phasing can still be refined in future announcements, so confirm the current position before you finalise any changeover plan. The direction of travel is clear: benefits move into payroll, and the annual P11D fades out for most employers.
What overseas employers should note
If you employ someone in the UK — including through a DPNI scheme — and you provide them with benefits, the same rules apply: the benefit is taxable, Class 1A NIC at 15% is due, and you have P11D / payrolling obligations. It's an easy area to overlook when you're managing payroll from abroad, and the move to mandatory payrolling makes getting your process right ahead of April 2027 well worth doing now.
Quick FAQ
What's the Class 1A NIC rate for 2026/27?
15% of the total cash equivalent of the benefits provided. It's an employer-only charge.
When are P11Ds due?
By 6 July following the end of the tax year, with the Class 1A National Insurance payable by 22 July (electronic).
Do I still need P11Ds if I payroll benefits?
For benefits you payroll, you don't file a P11D — but you still report Class 1A NIC. From April 2027 payrolling becomes mandatory in phases, so most employers will stop using P11Ds for those benefits.
How much will a benefit cost my business?
Roughly the benefit's value plus 15% Class 1A NIC. Our calculators can help you sketch the employer cost of a UK package.
Want benefits handled without the year-end scramble?
We run UK payroll — benefits, P11Ds and the move to payrolling included — for overseas employers and UK businesses. Fixed fees, published, no lock-in.
Get startedThis guide is general information, not tax or legal advice, and reflects our understanding of the rules as at June 2026. Figures are for the 2026/27 tax year and the mandatory-payrolling timeline may be refined by HMRC — please check the current position or get specific advice before acting.